Gas price recovery approaches 30.00%

Note: This section contains information in English only.
Source: Dukascopy Bank SA


Already prior to the US Federal Reserve Federal Funds Rate release on December 13, the price for natural gas bottomed at $2.23.

After the US Fed confirmed that it has ended its monetary tightening, the markets started to expect interest rate cuts. Lower interest rates would mean lower global borrowing costs and funds freeing up for consumption. This in turn started a surge of all commodity prices. As natural gas is a major input in energy production, the price quickly reached the $2.60 level.

The $2.60 was a barrier and the price consolidated below it, until the Houthis attacked shipping through the Suez Canal. This event boosted the price via two fundamental aspects.

Shipping costs have doubled due to larger demand for all types of fuel that ships use. Due to this reason there is upside pressure on all energy prices.

Qatar's natural gas would cost a lot more to European consumers due to forced shipping around Africa. The European markets might prefer US oil. Note that the price benchmark is the US oil price at the Henry Hub in the south of the United States.

Most recently, on January 4, the price reached a new high level at $2.86. In general, the Fed is unlikely set to change its policy until its next meeting on January 31 and there seems to be no solution in sight to the Suez Canal issue. Upside pressure to energy prices is set to remain intact.
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