Natural gas spikes higher as Europe cold snap takes shape

[MongiIG]

Natural gas breaking higher, with a European cold snap bringing about a fresh upward turn for energy

Source: Bloomberg

 

 

 Joshua Mahony | Senior Market Analyst, London | Publication date: Thursday 08 December 2022 

Natural gas arrests decline as European weather turns

Natural gas has finally started to show signs of strength after a dramatic two-week sell-off that saw the price of US gas lose 34%. Crucially that has taken price back into the crucial $5.329 support level established in mid-July. However, we have started to see the bulls come back into play since the Tuesday low, with price currently 10% above that level. This comes in anticipation of a cold snap that has started to sweep across Europe. The chart below highlights how Northwest Europe looks set for a period where temperatures are below the norms for this time of the year. The UK looks particularly interesting, with temperatures expected to move sub-zero in the coming week.

Source: Bloomberg

Rebound from support brings potential gains ahead

Natural gas prices are on the front foot once again today, with price heading back up to the $6 level. The bullish engulfing pattern confirmed yesterday brings the potential for a recovery phase coming into play from here. With that in mind, there is a good chance that we are set for a period of upside as price recovers lost ground. A break back below the $5.329 support level would be required to bring a fresh eight-month low and signal the continuation of the recent sell-off.

Source: ProRealTime