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Why Energy Prices are Likely to Retest Recent Peaks

Published 02/13/2023, 08:11 AM
Updated 07/09/2023, 06:31 AM

Biden administration’s timely action to shoot down some suspected Unidentified Flying Objects over the U.S. and Russia’s announcement of an oil-production cut by 500,000 barrels per day looks full of skepticism.

Undoubtedly, Putin’s administration seems to be weaponizing energy to hit back at the G7’s price caps by announcing production cuts and its minimum price structure.

Russia will slash its oil production by 5%, or 500,000 barrels per day, from March, Deputy Prime Minister and de facto energy minister Alexander Novak announced on Feb. 10, 2023.

Novak said,

“It continues the destructive energy policy of the countries of the collective west.”

I believe that Russian production cuts will not only disproportionately hurt developing countries and will also have a devastating impact on the West.

The world is struggling to control increasing inflation with the devastating impact of the steep rise in energy prices amid recessionary fear.

Global central banks are on high alert to control inflation, which saw a steep surge in 2021-22 after the global economic slowdown under the direct or indirect impact of pandemic restrictions.

On the other hand, since the temporary shutdown of the Freeport LNG terminal, natural gas prices had hit $10 before sliding downward below $3, which could be discouraging for energy producers.

Low energy prices could reduce inflationary pressure as the oil and gas-producing countries prefer high energy prices for their economic growth as they have only energy resources to survive.

Weather outlooks and other factors, once used to be the conventional methods for the energy-analysts to map the price direction of energy contents, could be replaced if Russia encourages the use of energy as a tool to weaken the economies of the other countries that capped oil and gas prices to control its aggressive destruction in Ukraine.

Undoubtedly, this attempt to use energy as a tool could encourage others to use other commodities in the same manner, to impact the economy of others in one way or the other.

No doubt, supply disruption since the second-largest U.S. liquefied natural gas (LNG) export facility was knocked offline by a fiery blast last June resulted in a sharp surge in natural gas prices. This may take a few more months to resume normalcy.

Still, the timeline for a restart of this facility is not visible and could keep the natural gas and oil prices higher.

On the other hand, under-investment in oil fields since the coronavirus pandemic could disrupt oil and gas production, as the higher interest rates will add one more leg to this problem.

Over-flowed stockpiles, lower energy prices, and the risk of interest-rate hikes will push the energy prices higher from the current levels.

I conclude that if the opening of the Freeport export facility does not resume normalcy soon, oil and gas prices could spike amid changing geo-political moves.

Weaponized energy could also be the next threat to grain and perhaps platinum and palladium, which the whole world will need in its push for electric vehicles to promote green energy.

Disclaimer: The author of this analysis does not have any position in Natural Gas futures. Readers are advised to take any position at their own risk, as Natural Gas is one of the most liquid commodities of the world.

Latest comments

The R word ,,, Recession = less demand for energy = lower prices
The author of this article should go write for comedy 🎭 central …
Have you NO Shame??
plz post a analysis
its indecisive market
 I hope now you got to know the power of Mr Singh. One bullish analysis from him can break many lower circuits. Do not challenge him further please.
This guy has the thickest skin of all. He kept on saying things and so unfortunately all turns out wrong, and wrong all the time. If he has just a little pride or integrity, I don’t think he will ever be written again. I only wish there’s MUTE BUTTON here, so that I can make him disappear for good.
Need one analysis to short
Your biggest mistake is that you give predictions based on your opinion. Try presenting facts without your opinions. For example: your title are always ready to pounce (go up) leave that stuff alone and reduce your opinion as factual because if people take your opinion and you are they will blame you. Keep your opinion neutral
why are you doing this? Everywhere you go it's line black swan happening. Please go away, you are a black mark in every market.
Satendra, great article……for a change. Maybe its best that you stay in this lane of predicting intermediate time frame moves instead of the short term, as you fail to often
kena ponda
I like his commentary...you guys are brutal.
I agree with you, but too many times he has been wrong on the short term frames
Disclaimer: The author of this analysis does not have any position in Natural Gas futures.🤣🤣🤣🤣🤣He already blown up four accounts last month with NG
I was pretty bullish on commodity but now I will open huge short position.....Guys just do everything opposite from this joke-man ....🤣🤣🤣🤣
Why are all the post making fun of this man? So what if he is often wrong? We all are often wrong especially all the s.a.'s commenting here i'm sure of that... Grow up your Bearish position screams volumes no doubt. imho of course!
Those who don't know his track record, take him seriously as he is writing in a reputed forum like Investing.com. And when people lose money because of his repeated wrong analysis, they are bound to tell him what he is. So, I request Satendra Singh to analyse his own analysis and go to the drawing board again.
Joke apart Mr Singh. What do you smoke or what brand do you drink before writing such an article. It takes strength writing something when you have been consistently wrong all the time.
What is this,….a joke?
Singh is a big MC right Singh ?
kena Ponda
No doubt, using undoubtedly multiple times in the article will make the reader have no doubt that the author's view is undoubtedly correct and undisputable.
Position against his views, you will be in profit.
Agree 100/100
after reading the article 4-5 times I only have one question to writer - what do you want to say.
you should hear him talk, can't understand a word he is saying.
 :) very true
It seems you have copy pasted bits and pieces from different sources, that's why there are many contradicting views in this article. It is not making any sense at all.
better stop your analysis. maket is not stopping low. you are barking the same thing from 7 dollars. remove this guy from Investing.com false analysis to loot the retail traders
true the biggest culprit
So do you want 2.00 before you think it is viable? lol
Brillisnt as always, lol...
Brilliant
*saying
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