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Natural Gas, Rhine River, Inventory, EIA, Technical Outlook – TALKING POINTS
- Gas prices in the U.S. and Europe accelerate overnight
- Near-critical decline of Europe’s Rhine threatens Europe’s energy
- Price likely to target the psychological 9 level after breaking the 20-day EMA
Natural gas prices in the U.S. and Europe rose overnight. The U.S. Henry Center benchmark rose 4.71 percent to $8.202 per million British thermal units (mmBtu). European prices for transfer of title facilities (TTFs) rose by more than 6%, pushing prices above €200 per MWh. Japan-Korea Market (JKM) prices in Asia were little changed.
As of August 10, gas storage facilities in Europe were nearly 73 percent used, according to Gas Infrastructure Europe (GIE). Despite a sharp drop in inflows from Russia through the Nord Stream 1 pipeline, the number has increased by 10% over the past 30 days. While the added storage capacity is encouraging, Europe still faces a potential energy crisis, especially if the continent experiences a colder-than-average winter.
Falling water levels on the Rhine are the latest threat to Europe’s energy supplies. The Rhine is an important waterway in Germany for the transport of goods and raw materials, including coal. A reduction in coal supplies could force Germany to burn more natural gas to meet its energy needs. This could slow progress in building winter supplies. German officials said Wednesday that water levels could soon drop to a critical point. Gas prices could rise next week if much-needed rain fails to arrive.
The Energy Information Administration’s weekly natural gas storage report is expected to show 39 billion cubic feet (Bcf) of injections in the week ended Aug. 5, according to a Bloomberg poll. This would be lower than the 41 Bcf injection the previous week. According to the EIA, total U.S. inventories are 336 Bcf below the 5-year average. A lower-than-expected reading could support further gains given that the market is already tight.
US Natural Gas Technical Outlook
The price broke above the 20-day SMA (simple moving average) after bouncing off the May 2021 trendline and 50-day SMA that previously provided support. The bulls can target the 9.00 psychological level. Attempts to overcome this level failed in July. The RSI and MACD oscillators tend to be dovish as trading in the Asia Pacific region turns dovish.
US Natural Gas Daily Chart
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