Russian tensions, Weekly inventories, EIA and IEA monthly reports!
Ahead of EIA's monthly short-term energy outlook, we could see that Natural Gas, sharply fell under $4 from its highest level since November 2021 at $5.40. According to the EIA reports, "In January, the natural gas spot price at Henry Hub averaged $4.38 per million British thermal units (MMBtu), up from the December average of $3.76/MMBtu." This report also confirms that "The winter weather forecasts are highly variable and create a significant amount of uncertainty in our price forecast"
On the other hand, one of the other main factors that have been lifting the Oil price was the tensions in the Russian Borders with Ukraine. Russia supports nearly 40-50 percent of natural gas imports of the European Union from non-EU countries. Therefore Russia is the largest supplier of petroleum oil in the EU-27. That is why increasing tensions, will raise not only the Gas price, even the Oil price also will increase. And, it is the main reason that in the past two weeks Germany and France were trying to bring Russia and Ukrainian to the negotiating table. Emmanuel Macron visited Russia, and Olaf Scholz, Chancellor of Germany also, will be visiting Moscow in the next few days.
Finally, we can say that the market participant had a positive perception of the negotiation process. Decreasing tensions levels in Europe, in line with positive news from other international geopolitical issues, put more on the energy market in general. The latest news and reports from negotiations between Iran and western countries also are positive and about reaching a series of initial agreements. Both news and reports will calm the market.
According to the weekly inventory levels, the latest API data shows that inventories decreased by 2.025 million barrels, while an increase of 675,000 barrels was the market expectation. And now market participants are waiting for EIA weekly inventory levels and Fridays Monthly EIA report.
From the technical point of view, we are back to the very important key support at $4. With lowering prices, as we can see the market volume also is decreasing. The lower market volume shows that bears' power is decreasing and lower numbers will be less likely to see. Breaching under the key level at 4 US dollars can encourage the bears, while any return from this level again will put the $4.70 in the spotlight.
