Spot natural gas pops higher after NATO meeting

Spot natural gas trades at 7 week high

Natural gas prices are trading up 4% so far today and are at the highest level since early February. Putting this into context spot natural gas prices are double what they were this time last year.

Concerns over supply amid the ongoing Russian war are exasperating an already tight market.

In the latest developments, the headlines following the NATO meeting today revealed that the group agreed to strengthen forces in eastern Europe, increase aid to Ukraine and tighten sanctions on Moscow - moves which are likely to strain relations further.

Yesterday, Putin announced that payment for natural gas will be switched to Russian roubles, in an effort to boost the national currency. However, he stressed that Russia would continue to supply energy resources.

Europe depends on Russian gas for 40% and is now in the difficult position of choosing between its own energy security or propping up the Russian currency.

Gas futures which are tied to TTF, Europe’s wholesale gas price, closed 9% higher yesterday. The move in spot natural gas was more modest.

The switch is unlikely to be simple. It would seem likely that contracts would need to be renegotiated from current terms of payment which are euros. Even so, this has been a key point in the war so far. It shows that Putin is prepared to risk ongoing gas contracts as the war deepens and the confrontation with the West escalates.

This is uncharted territory and is placing upward pressure on gas prices.

Learn more about trading natural gas

Where next for spot natural gas?

Spot natural gas trades within a triangle pattern and appears to be on the verge of a break-out. The price has been steadily climbing, supported by the 50 SMA and the multi-week rising trendline.

Today’s pop higher has taken the price to the multi-month falling trendline resistance. The RSI is supportive of further upside.

A break above the falling trendline could see the price breakout towards 5.727 2022 high, before bringing 5.991 the October high into focus.

Failure to break out the rising trendline could see the price rebound lower back towards the rising trendline and the 50 sma at 4.713. A move below here would expose the 100 sna at 4.430; a move below here could see the near-term bias change to bearish, bringing 3.975 into play.

How to trade with City Index

Follow these easy steps to start trading with City Index today:

Open a City Index account, or log-in if you’re already a customer.
Search for the market you want to trade in our award-winning platform.
Choose your position and size, and your stop and limit levels
Place the trade.

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.