Home Economy Natural Gas Price Analysis: Is It The End of the Uptrend?

Natural Gas Price Analysis: Is It The End of the Uptrend?

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Last Updated on 3 years by AllinAllSpace

It is no wonder natural gas is one of the most popular non-renewable hydrocarbons across the globe. It is estimated that over 20% of the global energy consumption comes from the use of natural gas.

As a result, its prices are subject to major fluctuations, directly or indirectly. Because it is a non-renewable energy source, it is the main source of releasing carbon dioxide as soon as it is burnt. However, as the demand is at an all-time high, what’s next for Natural gas prices? Is it the end of the uptrend? Or?

First, how much have natural gas prices increased?

Generally, when the winter season is on the ball, the consumption of natural gas is obviously at high levels. Since 2008, the prices of gas have fallen and stayed at a range of around $2-$4. However, over the last year, the natural gas markets have experienced increased demand, rising from below $2 to its highest level of the year of $5.45.

With that being said, it is fair enough to say that right now it’s difficult to see natural gas stay around these levels, particularly when production is fairly strong. Evidently, over the last few days, natural gas prices dropped from 5.5 to trade slightly below $5.

Natural Gas Weekly Chart
Natural Gas Weekly Chart

Can this price level be broken?

If the current $5.00 price level hold, only then will it be able to see a major change in the trend. Also, a strong break below $4.92 could signal a downtrend.

Although this is not the perfect time of the year now that ‘winter is coming’, it is still expected to see a major change in gas prices.

However, since the gas prices have been fluctuating globally all this while, it is hard for everyone to see how the market will close by the year-end. As explained above, because the supply is being debated as well, it is crucial to evaluate the supply side, which presently seems pretty good.

What is the current weather condition in the US? 

According to various experts, right now is the worst year for weather disasters in the US ever since 2017. This year has proven to be an amalgamation of cyclones, hurricanes, tornadoes, earthquakes, and whatnot. Secondly, when the country was flooded with heavy rains throughout the year, it was hard for the government to immediately seek control.

As per a famous report by the USA today, weather change has already caused 538 deaths of Americans this year. This is the worst figure recorded ever since Hurricane Maria that killed around 3000 people. For the rest of the US states, this has been recorded as the deadliest weather.

Keeping that in mind, this time of the year is usually a catalyst for rising natural gas prices. Nonetheless, natural gas prices have gained nearly 100% this year, which makes the current scenario different than previous years.

To check the natural gas weather forecast, visit this page.

What happened to natural gas so far this year?

Generally, there’s sort of a riddle of what happened to natural gas prices this year? Generally, several factors mentioned as responsible for the increase in nat gas prices. These include high demand due to the economic growth post-Covid-19 pandemic, the rise of stock markets around the world, cold winter in Asia and Europe, and problems in supply-side, in particular in Europe and Russia.

Natural gas price forecast 2022 – What will the future unfold for the next year?

Looking ahead to 2022, the most important thing to pay attention to is whether or not the supply will get disturbed. Right now, the gas prices are at around all-time highs since the demand has witnessed a sudden spark and the supply in Europe has been disrupted. While the gas prices fell in April, June, and July, they saw a major spark during the start of September and October. As of now, most experts are predicting that it will be hard for the prices to remain stable since inflation is affecting the economy as well.

As of now, the temperature in the US alone is on an average level since it hasn’t started snowing as of now. It is expected that snow will quickly bring a major change in weather conditions. Regardless, it’s difficult to predict that natural gas stays at these levels. Especially when Russia is expected to increase the supply as promised by Vladimir Putin.

The bottom line, natural gas is still trading with an upside bias. However, over the long term, we think natural gas prices are expected to fall, or at least stay consolidate for a while.

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