Chart courtesy of CQG.
This chart attracted my attention. This is my Chart of the Day for February 5.
Natural gas (LNG) prices have seen up and down trading this week with sizable gaps this month. LNG is expected to be affected more than crude oil by China’s retaliatory import tariffs on U.S. items.
LNG sales to China have been consistently strong for the past few years. In an article published last October in Pipeline & Gas Journal, Keisuke Sadamori, a director with the International Energy Agency (IEA), said natural gas demand in China rose by around 10% in the first eight months of 2024 and is set to expand by 16% by 2025 from 2023 driven mainly by industrial sectors.
“Strong domestic demand growth is set to drive up China’s energy imports to new record highs, both in 2024 and 2025, solidifying its position as the world’s largest LNG market,” Sadamori said.
However, China is having a relatively mild winter and its slowing economic growth doesn’t align with higher energy consumption.
In the continental United States, below-normal temperatures have increased the demand for natural gas. So if tariffs cause China to stop buying U.S. natural gas, that, in my opinion, would be bearish. Looking at this chart pattern, I predict that natural gas will be higher in the next 48 hours.
In the short term here in the U.S., my opinion is that with colder temperatures on the way, LNG will trade higher. Depending on the weather, the outlook may be good for higher LNG demand. That doesn’t help predict LNG prices for the next 48 hours but the prospect of long-term demand is promising.
Call me to discuss short-term and/or long-term strategies for natural gas.
Stephen Davis
Senior Market Strategist
Walsh Trading
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