28.01.202513:20 Forex Analysis & Reviews: Factors behind recent plunge in gas prices

The gas market has taken a significant nosedive following Donald Trump's recent comments regarding potential trade tariffs and economic barriers from the United States. He said that the US government plans to impose import tariffs on semiconductors and pharmaceuticals, and may also announce tariffs on steel and various other goods.

The gas market reacted swiftly to these statements, with prices falling significantly. Investors began to panic, fearing that these potential trade measures could trigger a chain reaction across other sectors of the economy. Experts note that this move could not only weaken the US position in international markets but also pose challenges for companies operating in the energy sector, especially in the context of the existing economic sanctions.

In an attempt to minimize losses, US gas producers have rushed to revise their strategic plans, considering possible cuts in production and exports. An increase in tariffs on steel and semiconductors could also have a negative impact on the construction of new gas extraction and transportation infrastructure, which would slow down the sector's growth in the long term. In this climate of uncertainty triggered by political statements, market participants are closely monitoring the situation, aware that any further steps taken by the administration could significantly affect the industry and the economy as a whole.

In addition, news emerged yesterday that EU countries have reached a compromise on extending anti-Russian sanctions. Hungary is expected to drop its objections to the decision in exchange for energy security guarantees. This compromise among EU member states highlights the dynamic response to the current challenges facing the region. Extending the sanctions has become an important step to ensure unity in foreign policy approaches, despite existing disagreements. Hungary, known for its pragmatic stance, managed to strike a balance between the need for economic cooperation and the commitment to adhere to common European principles.

The energy security guarantees, which are expected to be offered in exchange for supporting the sanctions, could include increased gas supplies from alternative sources and the development of infrastructure to diversify energy supplies. This move not only strengthens EU unity but also underscores the importance of flexibility in diplomatic relations. Certain policy changes could lay the groundwork for future dialogue and compromise, contributing to a more stable situation in the region.

Statements by Polish President Andrzej Duda have also been met with some pessimism. According to him, gas flows from Russia to Western Europe should never be restored, even if Russia and Ukraine reach a peace deal. Moreover, the Nord Stream and Nord Stream 2 gas pipelines "should be dismantled," Duda said in an interview with the BBC. This reflects Poland's principled stance on the future energy security of the country and the region, but it does not address or resolve the issue of dependence on cheap energy and raw materials provided by Russia.

As for the technical outlook for NG, buyers need to focus on regaining control of the 3.915 level. A breakout of this range would open a direct path to 4.062 and 4.224, as well as the April 2023 level around 4.373. The most distant target would be the 4.800 area. In a scenario suggesting a correction, the first support level is at 3.734. A breakout of this support level would quickly drag the asset down to 3.567, with the ultimate target being the 3.422 area.