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Natural gas prices gap lower while coal prices renew gains


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Natural gas prices are correcting as European economies suggest subsidising coal for energy usage.

Natural gasSource: Bloomberg
 
 Shaun Murison | Senior Market Analyst, Johannesburg | Publication date: Tuesday 21 June 2022 

Natural gas prices gap lower

Natural gas prices started a sharp correction from all-time highs over the last few days and even gapped lower at the start of the new week.

Energy prices for fossil fuels such as oil, coal and natural gas have soared since the onset of the Russia-Ukraine war and have been a major contributor to global inflation.

Coal prices rise on prospect of subsidising European energy needs

In the short-term, however, we are seeing coal prices rise as they trade inversely to that of natural gas.

The suggestion for the move is that disruptions to European imports of natural gas from Russia are likely to see increased use of coal to help fulfil energy needs.

Russian gas supplied to Europe through state-owned entity Gazprom, has been well below contractual agreements. This has been due to sanction-induced infrastructure obstacles and delays to equipment being returned from maintenance outside of the country.

Germany, Europe's largest economy, has been the first to suggest a temporary shift back to coal, to subsidise energy requirements and allow time to restock gas inventory ahead of the autumn (fall) and winter months.

German policymakers will submit a law to parliament pertaining to this on the 8th of July 2022.

Natural gas – technical view

Natural gas chartSource: ProRealTime

 

The uptrend in the price of natural gas from the 30th of December 2021 to the beginning of June this year (2022) has started to correct aggressively over the last few days.

The price correction is now testing the 50% retracement level of this trend. The 50% retracement level at 6575 and the 6450 level currently provide a support range for the price of natural gas. It is at this support range we are also seeing our stochastic oscillator suggesting the price to currently be in oversold territory.

Traders looking for long entry might need to exercise some patience waiting for a bullish price reversal at current levels, accompanied by a move out of oversold territory by our stochastic oscillator. Our preference would be to see a bullish price reversal firm enough to close above gap resistance (highlighted red) at 6990, before targeting a move back towards the 8130 resistance area.

In this scenario a close below the reversal low might be used as a stop-loss consideration for the trade. Should a bullish price reversal be supported by a move out of oversold territory and a close above gap resistance not manifest, and instead we see the price of natural gas closing below the 6450 level, the 61.8% retracement level at 5850 and 5680 become downside support targets respectively.

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Hello! Just a quick note. The Natural gas price above of 9k high was not the All-Time-High, that occurred years before. For charting analysis that is useful to know.

Also, as a more general note: 

The commodities bull market began in 2021, well before the present problems, and nothing to do with the war in Europe now. The primary cause sprung up and the bull phase continued. It appears that the war caused it or fuelled the inflation. This where the Economics and bankers make their mistake.

Association of the current situations to that bull phase continuing and its inflationary factor, and the prior primary cause of inflation is and still remains the trillions of printed QE and subsiding by central bankers of certain industries bad debts onto the government's book via the central bank that does no good.

The premise was that the built-up huge debts can lead to deflationary phase and to counter that, why you merely add more money into the system and some how it would balance out and it will turn out alright. THE FALLACY OF THIS PRESUMPTION IS A BIG HEADACHE. RESULTS ARE THE PROOF.

SO MANY PRESUMMPTIONS EXIST IN ECOMICS AND THE FINANCEAL WORLD. Over a  century of one-world-global-policies by central bankers encouraged around the world means most countries suffer similar problems down the road.  When worse calamities present themselves down the road, as it will in the future, why, they will present their NEW planned "solution". In the meantime the real WHYs will NOT have been addressed, as in the past , New Deal, Bretton Woods Agreements, etc... The latter WERE SUPPOSED TO "SOLVE" THESE TYPE OF CALMITIES !!!!!!!!!

Analysts everywhere check your financial history, check which economic laws have been violated in use and see if you can find the real WHYs. They ARE more obvious and maybe far less complex than "solutions" so far given in the past which have NOT solved the re-occurring booms and busts. 

OLD HABITS DIE HARD, AND CAUSE THE REST OF THE WORLD EXTREME HARSHIPS.

THE YOUNGER GENERATION LEARN LITTLE OF THE PAST HISTORICAL CASE HISTORIES AND STILL APPLY THE SAME-OLD, SAME-OLD THEORIES USED BY THEIR PEERS.

NOBODY CAN POINT FINGERS AT INDIVIDUALS RESPONSIBLE SHOULD THINGS REALLY GO WRONG.

AFTERALL ALL ARE USING THE SAME-OLD, SAME-OLD METHODS  WHO CAN YOU TRUELY BLAME? HOW DO YOU GO BACK?

 

 

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