Oil and Natural Gas: New lower low and two-day recovery

This morning’s oil price formed a new lower low at $ 114.50.
The price of natural gas continues its two-day recovery after falling from $ 9.00 to $ 7.00 on Tuesday.
Commenting on the country’s oil production levels, Russian Deputy Prime Minister Alexander Novak said that they could increase oil production next month.

Oil chart analysis

This morning’s oil price formed a new lower low at $ 114.50, which is a sign that we will probably see the continuation of this three-day bearish trend. Today’s resistance is $ 117.00, a price we did not manage to overcome during the Asian session. Conversely, we are now putting pressure on this morning’s low again. We need a continuation of the negative consolidation and a break below the previous low for the bearish option. Potential lower targets are $ 114.00, $ 113.00 and $ 112.00 support zone. For the bullish option, we need a new positive consolidation and a return to the zone around $ 118.00. After that, we could expect the recovery to continue towards the next targets on the chart. The first next is at $ 120.00, then the zone of 122.00-123.00 this week’s maximum.

Natural gas chart analysis

The price of natural gas continues its two-day recovery after falling from $ 9.00 to $ 7.00 on Tuesday. Currently, the price is consolidating around $ 7.60, and we could see continued growth towards $ 8.00. We also get additional support in MA20 and MA50 moving averages at this level. We need to continue the negative consolidation for the bearish option and retreat to the previous low of $ 7.00. The gas price break below opened a deeper bearish trend. Potential lower support targets are $ 6.80, $ 6.60 and $ 6.40.

Market overview

Commenting on the country’s oil production levels, Russian Deputy Prime Minister Alexander Novak said that they could increase oil production next month. Novak added that Russian oil production is being renewed because oil flows are redirected.

After falling to a 5-week low on Tuesday, natural gas prices in the U.S. rose again, gaining 4% on Wednesday due to high temperatures that are expected to last until next week. In the United States, natural gas prices fell on Tuesday due to news of the 90-day closure of the LNG export terminal in Freeport, Texas, after an explosion last week. “Completion of all necessary repairs and return to full operation of the factory is not expected by the end of 2022,” the company said in a statement on Tuesday.

Demand for natural gas to power air conditioners is expected to rise significantly as one-third of the United States is witnessing extreme heat warnings. Heat indices are expected to break records over the next few days, putting additional pressure on electricity suppliers. Heat waves also spread across Europe, where natural gas prices rose by more than 20 % on Wednesday. Gas prices in Europe continue to rise not only because of the temperature but also because of this week’s move by Russia to limit gas supplies to the North Stream.

On Tuesday, Gazprom announced that it would reduce gas inflow to Germany through Nord Stream by 40%, citing equipment repairs as the reason.

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