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Spot natural gas prices retreated in their recent trading at the intraday levels to record slight daily losses by -0.91%. They settled at $7.212 per million British thermal units, after falling in yesterday’s trading by -1.89%.
Natural gas futures fell on Tuesday after forecasts for average temperatures fell slightly, amid looming expectations of record production, ending a rally fueled by the sweltering summer heat. August gas futures contracts in Nymex settled at $7,264 per million British thermal units, down 21.5 cents on the day. The September contract was down 23.2 cents at $7,150.
Meanwhile, Russian President Vladimir Putin said on Tuesday that the flow of Russian natural gas to European customers had dwindled, and warned that it could continue to shrink. Putin’s statement increased pressure on the European Union, which fears Russia will cut off gas to wreak economic and political chaos in Europe during the winter.
Speaking to Russian reporters in Tehran where he attended talks with the leaders of Iran and Turkey, Putin said the amount of gas pumped through the Nord Stream pipeline to Germany would drop by more than 60 million to 30 million cubic meters per day, or about a fifth of its capacity, if the turbine was not replaced quickly.
He added that Russia could launch the recently completed Nord Stream 2 pipeline that never entered service, but noted that it will only have half of its allocated capacity because the rest has been used for domestic needs.
Elsewhere, the Freeport LNG outage that followed the early June fire reduced US export capacity by about 2.0 billion cubic feet per day through at least early fall. This affects the ability of US exporters to meet European demand for LNG, in particular, amid strong calls from Europe amid the Russian war in Ukraine over efforts on the continent to reduce dependence on Kremlin-backed gas.
Technically, the decline in natural gas came as a result of touching the resistance of the 50-day simple moving average. There was also an influx of negative signals in the relative strength indicators, after it reached overbought areas, in order to try to retreat to gain some positive momentum and disburse some of this overbought buying. This is in light of the dominance of the main bullish trend over the medium term and its trading along a minor bullish slope line, as shown in the attached chart for a (daily) period.
Therefore, we expect the rise of natural gas to return during its upcoming trading, provided that it first breaches the resistance level 7.254, and then targets the resistance level 8.054.
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