Nov 17, 2023

Natural gas prices remain on an uptrend but have shown recent weakness as tensions between Ukraine and Israel have eased. 

natgas-chart

Nat Gas – Daily Chart

US natural gas trades at 2.92 after recent highs around the 3.30 level. The 2.80 price mark has been held thrice since October and could be tested to confirm the uptrend. 

European natural gas futures were lower. Unusually mild weather and brimming inventories reduced winter supply risks. Prices had been trading in a tight range due to solid inventories and Europe’s vulnerability to supply interruptions. 

The International Energy Forum warned the region to remain vigilant despite its full gas tanks. Europe has successfully managed to fend off a supply drought caused by policymakers’ desire to replace its pipeline flows from Russia. 

Traders are examining demand to determine whether European households and companies will start to increase consumption after record-low levels last year. However, how much demand destruction was permanent due to business relocations or behavioural changes is still being determined. 

“We haven’t really seen cold weather,” a BP analyst said at the Wood Mackenzie industry conference in London this week. “We don’t know what will happen when it gets really cold.” 

In the meantime, natural gas prices could dip further. However, traders should be on guard for demand increases or further tensions in geopolitical hotspots.

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