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

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.