Oil paused the bears; Gas lost almost 10%
While Oil prices, after a free fall to $102 in the past day, could recover and trade stable at around $140, Natural Gas lost 9.6% today to print one of its most significant single-day falls in years.
As we all know, one of the most critical determinations for the Oil price is the Russia-Ukraine conflict. Earlier this week, several officials from different countries mentioned that people around the world have already gotten used to the war news, and it will lose its importance for them, especially with inflation pressures that are increasing all around the globe. It means people in the US, Germany, UK, and other countries are more worried about their income and living costs than the Ukrainian army, which is getting more tired every day and needs help.
Britain's Defense Ministry said that Ukrainian forces had to withdraw from some areas near Lysychansk to avoid being surrounded by the Russian army. Russian, with more reinforcements focusing now on the western cities of Luhansk province, is trying to capture the whole state.
As the war continues in Ukraine, concerns about the Oil market increase and keeps the market hotter. On the other hand, continuing the war significantly threatens the global economy and energy market by decreasing demand. This global recession concern was the main reason that, in the past days, we saw a free fall in the oil prices. While European is trying to buy less oil from Russia, Putin could sell more oil to the Asian countries. As Indian officials say, now Russia provides 10% of Indian oil imports, which was just 0.2% pre-Ukraine war.
On the other hand, the IEA warned that European countries should take urgent measures further to cut off the supply of Russian Natural Gas to avoid the outbreak of an energy crisis. IEA report shows that European countries are restarting old coal-fired power plants to reduce their dependence on Natural Gas. Data show that after European countries announced energy sanctions on Russia, their current dependence on the latter's natural gas supply has dropped to 20% from the previous 40%. Considering that countries are not yet fully prepared to realize the transition to clean energy, the Gas and Oil markets will still stay hit by a series of aftermaths of the situation in Russia and Ukraine, and price fluctuations will also be generally violent. Therefore today's nearly 10% fall is not something that can scare the investors. Even with this free fall towards $6.25, it is still so expensive and has room to grow up again.
From the technical point of view, we are in a clear downtrend in the daily chart. $6.50 is the crucial pivot, and if Natural Gas can not recover above this level, technically, more falls will be in the spotlight. However, with decreasing the market volume and this price reduction, deeper levels do not seem like much possible to be seen.
