Gas Prices Rise as Winter Approaches

Natgas, Timeframe: 1W, Tool: SMA50

Technical Analysis of Natural Gas

The attached chart shows that natural gas prices have continued to rise for the second consecutive week, gaining more than 4% since the start of the current week, following a 6.3% increase during last week's trading sessions. Prices are currently holding near $3.23, approaching a resistance zone around $3.30. What makes this level significant?

1. It represents the 50-week simple moving average (SMA 50), reflecting the average price over the past 50 weeks.
2. It also marks a previous price peak recorded last June, from which prices declined from $3.30 to around $2.60.
3. Therefore, this is a key technical level that prices must break above if natural gas is to maintain its positive momentum.

Fundamental Analysis of Natural Gas

As the US president announced plans for large-scale oil and gas exploration on Greenland, Europe is facing a rise in natural gas prices to their highest levels in nearly four years. This comes amid a decline in inventories below their usual levels, particularly concerning given the fuel's widespread use for heating during the winter months.

The following are the key fundamental factors influencing natural gas prices:

1. Ongoing geopolitical tensions in the Middle East and Europe and their impact on energy supplies.
2. Rising shipping and insurance costs, which have reached record levels.
3. Declining inventories amid supply shortages, with natural gas prices climbing to their highest levels in four years.
4. Inventories are expected to reach 75%–78% at the beginning of November, approximately 10 percentage points below the average for the previous five years.

Will Europeans face further pressure from rising natural gas prices, potentially driving inflation higher and affecting interest rates? Or could positive surprises emerge?