Natural gas plummets 14%
Freeport warns over a delay to restarting operations
Natural gas prices have tumbled over 14% at the time of writing after the operator of the Texas export terminal, Freeport LNG, said that it could take 90 days to partially restart the facility after an explosion last week, and it may take the rest of the year to complete all repairs and return to full operation.
Freeport had initially said that the facility would be closed for a couple of weeks.
The more extended closure of the facility means that the US natural gas market will be oversupplied for a period, as the gas will remain in the US rather than being exported. This will loosen the LNG gas market in the US but tighten it globally, such as in Europe and Asia. The facility exported around 2 billion cubic feet of LNG per day, around 2% of US demand which, has been temporarily halted.
Producers aren’t about to cut back production in light of the Freeport LNG facility update.
Even so, natural gas prices are still up some 90% since the start of the year. While demand has rebounded as economies have reopened after COVID lockdowns, supply has remained tight.
Russia’s invasion of Ukraine tightened the market further. Europe is attempting to transition away from dependency on Russian energy, both gas, and oil. As a result, record quantities of US LNG are being directed toward Europe.
Soaring energy prices are adding to inflationary issues impacting the US and European economies. US CPI unexpectedly rose to 8.6% YoY in May.
Learn more about trading natural gas
Where next for Natural Gas?
Natural Gas has plunged 14%, falling through the 20 and 50 sma before running into support at 7.134. This is the first time the price has traded below the 50 sma since late January, which, combined with the bearish RSI, could support further downside.
Sellers will need to break below yesterday’s low to extend the bearish move towards 6.500, the May low, and October high. A break below here would negate the near-term uptrend.
On the upside, resistance can be seen at 7.840, the 50 sma ahead of 8.00, the May 23 low and round number.
How to trade with City Index
You can trade with City Index by following these four easy steps:
-
Open an account, or log in if you’re already a customer
• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
- Search for the market you want to trade in our award-winning platform
- Choose your position and size, and your stop and limit levels
- Place the trade
From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.
As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.
City Index is a trading name of StoneX Financial Pty Ltd.
The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.
While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.
StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.
It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.
StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.
© City Index 2024