Natural gas prices rise as supply concerns and technical patterns signal growth
Gas prices climb as Russia-Ukraine tensions fuel supply fears
Natural gas futures in Europe climbed to €46 per megawatt-hour, rebounding from a one-month low of €39 recorded on December 16. This rise comes amid escalating fears over supply disruptions as a critical transit agreement between Russia and Ukraine nears its expiration.
Ukrainian President Volodymyr Zelenskiy has expressed concerns about facilitating Russian gas transit without assurances that the Kremlin won't benefit economically during the ongoing war. The situation has intensified supply worries, particularly for nations like Slovakia, which remains dependent on Russian gas flows and is scrambling to secure alternative arrangements.
Further fueling the price surge are forecasts predicting colder weather across Europe, leading to faster-than-usual depletion of gas stockpiles. Should the Russia-Ukraine transit deal collapse, demand for liquefied natural gas (LNG) is expected to spike. This would heighten competition between Europe and Asia, particularly as LNG infrastructure expansion faces delays.
Natural gas price movement (Nov 2024 - Dec 2024) Source: TradingView
Technical momentum strengthens natural gas outlook
From a technical perspective, natural gas markets exhibit strong bullish momentum. The daily chart indicates a "cup-and-handle" pattern, with the price breaking the neckline at $3 and consolidating positively between $3 and $3.60. This development was followed by a breakout above $3.60, signaling further upward potential. Additionally, the market price remains above the 50-day and 200-day simple moving averages (SMAs), reinforcing the bullish trend.
On the 4-hour chart, an ascending channel and a rounding cup pattern have formed, with resistance observed around $3.80. The breakout from the $3.50 to $3.60 zone further underscores the positive technical setup, suggesting that prices could continue to rise.
As Europe braces for potential supply disruptions and colder weather, the increasing reliance on LNG underscores the fragility of the global energy supply chain. With competition for LNG shipments expected to rise, energy prices may face heightened volatility. Market participants are closely monitoring developments in the Russia-Ukraine negotiations and technical resistance levels to anticipate future price movements.
Previously, we discussed natural gas prices hitting $3.7 due to colder weather and rising LNG demand. These ongoing factors, coupled with current supply concerns, continue to shape the market's bullish trajectory.
