Jump to content

Natural Gas Outlook: U.S. Sanctions on Nord Stream 2 Push LNG Higher


Recommended Posts


  • U.S. continues opposition of Nord Stream 2 pipeline.
  • Russian supply uncertainty.
  • Colder U.S. and European weather forecasts keeps demand elevated.
  • Falling wedge resistance break.

Natural Gas Outlook: U.S. Sanctions on Nord Stream 2 Push LNG Higher



"With today's action, the Administration has now sanctioned 8 persons and identified 17 of their vessels as blocked property pursuant to PEESA (Protecting Europe's Energy Security Act of 2019) in connection with Nord Stream 2."- Secretary of State Antony Blinken

LNG spot prices rallied yesterday and continues higher today after the U.S. imposed new sanctions concerning the Nord Stream 2 initiative (a pipeline built to connect Russia to Germany). The U.S. is concerned with Russia’s potential influence over the European region by using their energy supplies to pressurize countries within the area.

To compound the situation, Russia/Ukraine tensions are rising and reliance of Ukraine on the pipeline could be catastrophic going forward. Should Russia invade Ukraine, the U.S. benchmark (Henry Hub) could see a rally as European imports are likely to skyrocket. We are already seeing an increase from the European region (light blue) shown in the U.S. export chart below. Later today the U.S. Energy Information Administration (EIA) releases its weekly storage report (10:30 ET) which should bring some short-term volatility to the market - last weeks showed an uptick in stocks which saw marginal declines in Henry Hub contract prices.


U.S. LNG exports by region

Chart prepared by Warren Venketas,Refinitiv

Weather in the U.S. and Europe are expected to be cold which should require more demand for energy. To measure the demand for energy when temperatures are cold, the Heating Degree Day (HDD) is used. The graphic below shows the steady increase in HDDs with actual levels exceeding the 10-year rolling normal for most of 2021. This is expected to extend into December which could lead to higher LNG prices.


U.S. heating degree days forecast

Chart prepared by Warren Venketas,Refinitiv

The supply side shows a slight uptick in inventory as per last week however, compared to last year and the 5-year average current inventory data is significantly lower. This supports the present bullish bias surrounding LNG spot prices.

Enhance your knowledge on Natural Gas with my Top Trading Strategies and Tips!



Natural Gas Henry Hub daily chart

Chart prepared by Warren Venketas, IG

The daily LNG chart above shows a breakout from the falling wedge formation which traditionally points to a bullish continuation. Prices have broken above wedge resistance a few times since October but were unable to close (daily candle) above. The wedge break coincides with the 5.000 psychological zone which has maintained it’s pull of recent, indicating market hesitancy and the need for a directional catalyst. If today’s candle close remains above wedge resistance and the 5.000 level (potentially due to lower U.S. inventories), the outlook would favor additional upside.

The Relative Strength Index (RSI) remains around the midpoint 50 level which supports the uncertainty surrounding market participants.

Resistance levels:

  • 5.500
  • 20 and 50-day EMA’s

Support levels:

  • 5.000
  • 4.729 – recent swing low


by Warren Venketas, Analyst, 24th November 2021. DailyFX

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
    • Total Posts
    • Total Members
    • Most Online
      10/06/21 10:53

    Newest Member
    Joined 25/03/23 21:50
  • Posts

    • Charting the Markets: 24 March The FTSE 100, DAX 40 and Nasdaq 100 slide on renewed banking woes while EUR/USD, EUR/GBP and GBP/USD drop as the US dollar, gold appreciate due to flight-to-quality flows. Crude oil and copper tumble on recession fears.  Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Friday 24 March 2023         This is here for you to catch up but if you have any ideas on markets or events you want us to relay to the TV team we’re more than happy to.  
    • Market Breakdown | WTI Oil, EURUSD, GBPNZD, EURAUDHere are the updates & outlook for multiple instruments in my watchlist.1️⃣ WTI Oil daily time frame️The market is trading in a long term bearish trend .After the last sharp bearish movement, the market is steadily recovering.Ahead, I see a major horizontal supply area.Probabilities are high, that the next bearish wave will initiate from there.2️⃣ EURUSD daily time frameAfter a breakout of a solid daily resistance, the market is preparing for its retest.Watch carefully the underlined zone and look for buying opportunities from there.3️⃣ EURAUD weekly time frameThe pair is currently approaching a weekly horizontal resistance cluster.Taking into consideration, that the pair is quite overbought, probabilities will be high to see a pullback from that4️⃣ GBPNZD daily time frameThe pair is currently retesting a broken neckline of an ascending triangle . As we discussed earlier, the trend line of a triangle and its neckline compose a contracting buy zone now.Chances will be high that the next bullish wave will initiate quite soon.For Additional confirmation use: Divergence Indicators
    • #CHFJPY: Classic Bearish Setup 🇨🇭🇯🇵   🔻CHFJPY has nicely respected a confluence zone based on a horizontal 4H resistance and a 0.5 retracement of the last bearish impulse.   The price formed a double top pattern on that and broke its neckline.   Probabilities will be high that the pair will drop lower soon. Goals: 141.172 / 140.363  
  • Create New...