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Natural gas rebounds as regulators delay key Nord Stream 2 pipeline


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Natural gas rebounds as regulators delay key Nord Stream 2 pipeline

Natural gas on the rise as German regulators delay Nord Stream 2 pipeline, with the rebound from support pointing towards a potential period of strength.

bg_gas_hob_870772.JPGSource: Bloomberg
 Joshua Mahony | Senior Market Analyst, London | Publication date: Tuesday 16 November 2021

Natural gas rebounds as Germany regulator suspends Nord Stream 2 certification

Natural gas prices in Europe have turned higher over the past 24-hours, following the German regulator’s decision to “temporarily suspend” certification of the Nord Stream 2 pipeline.

The Swiss-run project is seen by many as key to the supply of gas from Russian giant Gazprom, which has promised to fill European storage tanks in a bid to drive down prices. This pipeline may not necessarily lift natural gas exports immediately, but many see it as a key battleground the Russians will utilise as a means to influence, considering the current pricing crisis.

While Gazprom has promised higher exports, we are yet to see that come to fruition in any meaningful way. As such, Russia will continue to push for the approval of the pipeline under the provision that such a move would result in higher gas exports and lower prices. With that in mind, traders see this latest delay as a sign that gas imports to Europe will remain tight for the time being.

Belarus threaten to cut gas transfers

Another cause for concern has come from Belarus, with the country’s leader warning that he could cut off the Yamal pipeline in retaliation to sanctions placed on the country.

Russian exports from the Yamal gas fields head to Germany, through Poland and Belarus. While they do not feed any other countries, they are key in building up the German gas storage facilities. While this would be unlikely given their close relationship with Russia, it does provide another potential flashpoint that could spark an upward move for gas.

Natural gas technical analysis

This week has seen natural gas prices rebound from the key $4.76, which tallied up with an ascending trendline support dating back to April.

The wider uptrend does remain intact, with this recent pullback bringing a rare move into oversold territory on the stochastic oscillator. The push up out of that zone highlights a return of bullish sentiment, pointing towards a potential rebound from here.

A break back below $4.76 would be required to negate that view.

NG-Daily-2021_11_16-12h13.pngSource: ProRealTime

 

On the 4-hour chart, we can see that price has rebounded into the double bottom neckline of $5.22. A rise through that level would bring about greater confidence for the bulls.

To the upside, there are still hurdles to overcome, yet we look likely to gain traction in the meanwhile if this intraday double bottom completes.

NG-4-hours-2021_11_16-12h16.pngSource: ProRealTime
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