Those who have been following natural gas prices will notice that they have remained stable since the beginning of this year, forming a pattern known as a "symmetrical triangle," as depicted in the attached chart. The highest price recorded for gas this year was $3.4 in January 2024, while the lowest was $1.6 in February. Since then, the price has formed a series of lower highs and higher lows, creating a technical pattern that resembles a triangle.

 

Figure 1: Natural Gas, 1W, Tradingview

This technical pattern, based on the principles of technical analysis, suggests that the next price movement will likely match the height of the triangle, either upward or downward. This means the next anticipated move could be around $1.7. If the resistance of the triangle is broken, the price could rise to $4.6, or if the support is broken, it could drop to approximately $0.40. However, if the price reaches $4.6, it wouldn’t be surprising, as natural gas prices have hit that level several times in the past

 

Factors that may lead to a decline in prices as per analyst’s expectations

  • Increased natural gas reserves in the U.S.: Reserves have risen by approximately 4.6% above the average of the previous five years, which could ease supply pressures and drive prices lower.
  • Falling costs for chartering natural gas tankers: Due to an abundance of available tankers, chartering costs have dropped to their lowest levels since 2018, making transportation cheaper and increasing supply.
  • Reduced demand growth forecast by OPEC: The Organization of the Petroleum Exporting Countries has revised down its growth forecasts for natural gas demand for both the current year and the next, indicating slower consumption growth.
  • Expansion of renewable energy projects: New developments in wind and solar energy are reducing reliance on natural gas, potentially decreasing demand over time.
  • High storage levels in Europe: European gas storage sites are at 95% capacity, which is higher than the seasonal averages. This surplus could also ease any pressure on gas prices during the winter months.

Factors that may support prices to rise as per analyst’s expectations

Geopolitical tensions in Europe and the Middle East: Ongoing conflicts and instability in these regions could lead to unplanned supply interruptions, especially in key waterways that are critical to global supply chains. These geopolitical risks create vulnerabilities in the global energy system, posing a constant threat to the stability of natural gas supplies. As a result, such tensions could cause sudden and unpredictable price increases due to supply disruptions