The imposition of tariffs also has an effect on the price of natural gas, which has fallen dramatically since Trump announced his policy of reciprocal tariffs and the trade war has intensified.
In general, there have been significant declines in natural gas futures, with a drop of about 10 percent in value.
The magnitude of this drop is due to fears that the ongoing global trade war could lead to a reduction in industrial activity and gas demand.
The Trump administration has created many waves of concern and economic instability around the world. The trade tariffs imposed by the president have affected not only finished goods but also the raw materials used to create them. With the addition of Chinese taxes on U.S. products, the situation has become even more uncertain, with the risk of a global recession increasingly imminent.
The trade war has had a significant impact on the global economy, with increased tariffs leading to higher prices for goods. This in turn has reduced demand and produced a decrease in industrial production and overall growth. Experts also predict a possible reduction in production in energy-intensive sectors, as market uncertainties may lead to lower energy needs in the future.
There are several factors that could affect gas supply and related prices in the coming years. One of these is the increase in oil production starting in May.
In addition, changes to storage targets in Europe are expected, which could further increase the gas supply. At the same time, more liquefied natural gas shipments to Europe are expected due to lower demand from China.
All this could keep gas prices low in both Europe and the United States.
Since the announcement of the duties, many companies have already begun publicly discussing possible shutdowns and production reductions. With the ongoing trade war, these decisions could become a reality.
But it could also be good news for prices. As we all know, the tariff war is likely to end soon.
This means that with the closure of the fields- which take at least 3 years to reopen- we could see limited gas supply during the summer, when peak demand is expected and unusual heat is expected, this will be very good for natural gas prices.
From a technical point of view, this asset is one of the few to keep prices above the 200-period moving average. In addition, the rises of the past few months are supported by above-average volumes.
The natural gas supply is currently below average, which is a positive sign for strengthening prices. In such an unstable market, I have decided to invest in natural gas and expect prices to reach $5 in the summer, with a possible 50% growth.
It is important to emphasize the gas futures curve, which is currently backwardation in the long run.
When there is strong demand, markets tend to reduce contango and even invert the curve to backwardation. The backwardation curve can be theoretically unlimited; that is, the price differential between near and far maturities can continue to grow indefinitely.