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Lower-than-expected PMI data from significant nations, particularly the US, which raises doubts about growth and ongoing demand, caused a decline in the price of natural gas. Due to a rise in demand for natural gas, which is used to power air conditioning in many nations, the price has been rising.
The primary producer of gas in Europe, Norway, had closures and interruptions, which helped to keep prices stable. Prices are further being supported by the brittleness of the Norwegian supply, which saw the closure of the Hammerfest LNG export terminal on May 31 due to a leak and the acceleration of maintenance work at the Nyhamna processing plant by one month.
In terms of properly balancing supply and demand, the European gas market and the global gas market are not yet out of the woods. The data, however, indicates that things might not be as bad as they seem, as a warmer spring than anticipated has allowed stocks to build up.
At about 73% full, European storage facilities are still quite full compared to the 56% average for the same time of year over the previous five years. Recent gas store data from Japan and South Korea show significantly higher levels, and worries about Chinese growth imply that Asian demand may not be as high as anticipated.
Data showing traders’ positioning in the US Natural Gas futures market will be released by the Commodities Futures Trading Commission (CFTC) at 20:30 GMT on Friday.
If commercial positions have shifted to predominantly long or short, then that often signals a change in trend. Natural Gas is in a long-term downtrend since turning lower at the $9.960 MMBtu peak achieved in August 2022.
The positive convergence of the Relative Strength Index (RSI) momentum indicator with price, starting in May 2023, indicates that the bearish momentum has significantly tapered off since February 2023. Natural Gas would need to surpass the previous lower high of the long-term decline at $3.079 MMBtu in order to signify a change in the general trend.
