What is going on with gas?

What is going on with gas?

2022-12-16 • Updated

Last week, the price of US gas had posted three days of heavy falls. The gas slumped from the highs near $5.5/mmBtu to the lows of $4/MMBtu near the 200-period MA. On Monday, the energy asset opened with a gap below the 200-day moving average. What is going on with this energy asset these days, and should we prepare for further falls?

What is driving the price of gas?

Currently, the gas price is driven by geopolitical news and the overall risk sentiment in the markets. For sure, the most impactful events for the gas’ price have been happening in Europe. The gas prices in Europe were boosted to an all-time high above 1900 amid the energy crisis in the region and political uncertainties related to a delay in launching of Russia’s Gazprom pipeline called Nord Stream 2. In addition, the certification requirement of Nord Stream 2 in Germany slowed the gas distribution in Europe and pushed the gas prices up. At the same time, the newly identified omicron strain created uncertainties in the market. The risk-off sentiment resulted in investors rebalancing their portfolios and withdrawing their funds from risky assets. As commodities are traditionally viewed as risky investments, gas prices reacted with falls.

Another factor that pulled the gas price down last week was the forecast for warmer winter in North America. The weather outlook for December, January, and February suggests higher temperatures in several US regions. It is a bearish factor for gas.

Should we expect a further plunge?

Given the indeterminacy around the gas supplies coming from Russia, the price has a high chance of an upcoming reversal. However, a clearer picture will be visible within a couple of days. Technically, the gas price gapped below the 200-day MA and tested the support of August at $3.8/mmBtu. Buyers may try to fill in this gap and push the price back to the resistance of $4.20/mmBtu. However, a plunge below the support of $3.8/mmBtu will signal a continuation of the downtrend. In that kind of scenario, the next support will lie at $3.5/mmBtu with a further plunge to $3.15/MMBtu.

XNGUSDDaily.png

Note that if you want to trade gas with FBS, you must choose XNG/USD in MetaTrader or FBS Trader.

START TRADING

Similar

What Can Drive Oil below $90 a Barrel?
What Can Drive Oil below $90 a Barrel?

The past two years have seen the biggest swings in oil prices in 14 years, which have baffled markets, investors, and traders due to geopolitical tensions and the shift towards clean energy.

Latest news

Gold is Rising Despite Inflation Returns
Gold is Rising Despite Inflation Returns

Gold prices are rising for three consecutive days ahead of the Federal Reserve (Fed) interest rate decision, which is expected to remain unchanged due to declining inflation and a positive economic outlook. Investors are keen on the Fed's interest rate guidance, fearing a hawkish stance that could trigger market risk aversion.

Can the Chinese Economy Recover?
Can the Chinese Economy Recover?

Amid concerns of a Chinese economic slowdown, reports of declining investment often overlook China's efficient investment strategy in emerging sectors for long-term growth. China has taken measures to stabilize foreign and private sector investments, like reducing the reserve requirement ratio to boost investor confidence.

Deposit with your local payment systems

Data collection notice

FBS maintains a record of your data to run this website. By pressing the “Accept” button, you agree to our Privacy policy.

Callback

A manager will call you shortly.

Change number

Your request is accepted.

A manager will call you shortly.

Next callback request for this phone number
will be available in

If you have an urgent issue please contact us via
Live chat

Internal error. Please try again later

Don’t waste your time – keep track of how NFP affects the US dollar and profit!

You are using an older version of your browser.

Update it to the latest version or try another one for a safer, more comfortable and productive trading experience.

Safari Chrome Firefox Opera