By IFCMarkets

Germany has approved opening the new joint venture with Gazprom for new Nord Stream 2 pipeline construction. Russian natural gas meets high demand. For the first 20 days of December Gazprom has increased its deliveries to Europe to 9.9bn cubic meters which is 32% above the last year’s level. The Ukrainian transit situation is stabilizing gradually. The Gazprom CEO had a meeting with CEO of Ukrainian Naftagaz. Will this positive news support the Gazprom shares?

The Federal Cartel Office of Gernamy, Bundeskartellamt, let Wintershall, Shell, E.ON, ENGIE, OMV acquire the share in Nord Stream 2 AG which will construct the Nord Stream 2 pipeline. The companies will get 10% share each while Gazprom will own 50% of the capital. The pipeline is scheduled to be put into service in Q4 2019. France and Great Britain have increased the purchases of the Russian gas almost twofold, Italy by 75% and Germany by 19% since the start of December. Alexey Miller and Andrey Kobolev, the CEOs of Russia’s Gazprom and Ukraine’s Naftagaz, met in Berlin to discuss the possible renewal of Russian gas purchases by Ukraine as early as in Q1 2016. This year Gazprom has signed the agreement gas sector cooperation with the state Iran’s National Iranian Gas Company. We believe the move was aimed to avoid unneeded competition. The prices for the Russian gas are tied to the oil prices by a special ‘price formula’. Gas in not separately traded in the global markets. Despite the falling oil prices, Gazprom received around $11.6bn of net profit in Q1 2015.

On the daily chart of Gazp: D1 the downtrend has faded away to move sideways. Gas has hit the record 12-year low recently. The Parabolic indicator and MACD keep giving sell signals but the positive divergence is seen in RSI and MACD. Gazprom prices have slumped almost 45% since this May. The bullish correction may develop in case the ADR prices surpass the first of the second fractal highs at 3.87 or 3.93. These levels may serve the points of entry. The initial risk-limit may be placed below the 12-year low and the two last fractal lows at 3.62. Having opened the pending order we shall move the stop to the next low following the Parabolic and Bollinger signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level at 3.62 without reaching the order at 3.87 or 3.93, we recommend cancelling the position: the market sustains internal changes which were not taken into account.

Market Analysis provided by IFCMarkets