Daily Market Recap – NGAS Natural Gas attempts to turn the tide after Putin's statements

The prices of various gases have been falling on the financial markets since Wednesday. American natural gas has lost 16% and European gas 40% from their peak on Wednesday.

Vladimir Putin's statements have somewhat reassured market operators, who were beginning to panic more and more at the idea of an unprecedented energy crisis. The Russian president announced on Wednesday that Gazprom would increase its gas exports to Europe via Ukraine and could reach record levels.

The second unexpected rise in U.S. oil and gasoline inventories also helped reassure investors Wednesday. EIA data showed that crude inventories rose by 2.346 million barrels last week.

While the energy crisis is far from over and demand for gas will remain strong in the coming months, prices could turn around if other producing countries announce increased exports of gas, or other fossil fuels also used for power generation like coal and oil.

From a technical perspective, the trend in U.S. natural gas is unquestionably bullish, but it could be starting a retracement or even a bearish reversal. At least that's what Wednesday's “bearish swallow” formation suggests. Sellers seem to have regained control since gas tested its 2014 high at $6.5.

Thus selling strategies with the idea that there is a bullish market exaggeration and that it will correct seem plausible. The first support to watch will be 2018 high at about $4.9 broken in early September, followed by the 2020 high at $3.4 broken in early summer.

(Chart Source: Tradingview 07.10.2021)

It is not impossible that the correction in the price of gas will be brutal. This was certainly the case for lumber, which lost more than 60% from its April peak after climbing more than 300% in a few months due to severe supply pressures.

The outlook for gas would become bullish again if it rebounded above its high at $6.5.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.