Gas prices have dropped, reflecting the widespread pessimism caused by the potential onset of global trade wars initiated by the United States as early as February 1 of this year.

However, all of Donald Trump's efforts to push EU countries to buy exclusively American gas are proving ineffective. It is unlikely that the EU will abandon Russian LNG as part of the 16th package of sanctions against Moscow, given the high dependency on these supplies.

Russian LNG has become one of Europe's last significant sources of energy dependence after the cessation of gas transit through Ukraine. Moreover, adopting new sanctions requires unanimous agreement, which will be difficult due to Hungary's active resistance and the continued reliance of some countries on Russian gas. Last year, the EU imported record volumes of LNG from Russia, with France, Spain, and Belgium being the largest recipients. Instead of an immediate halt to Russian supplies, the EU plans to follow a roadmap aimed at gradually reducing imports of Russian fossil fuels.

European policymakers prefer to avoid sharp restrictions on fuel imports to prevent price spikes that have already impacted domestic industries. However, new supplies from ongoing projects in the United States and Qatar are expected to help reduce LNG prices by 2026-2027.

Sanctions against Russia are expected to be extended only if Ukraine restores gas transit, ceases attacks on the Turkish Stream pipeline, and stops threatening oil transit routes. Currently, Hungary, which opposes new sanctions, has already incurred losses of €19 billion due to the existing measures. This explains the country's reluctance to approve additional restrictive measures.

The EU clearly lacks a backup plan in case Hungary vetoes the vote on extending sanctions against Russia. EU sanctions packages must be renewed every six months, requiring unanimous support from all 27 member states. The next vote is scheduled for January 31.

Amid growing tensions between the European Union and Russia, Hungary remains a key player capable of influencing the process of extending sanctions. Despite the apparent necessity for a tough stance against Moscow, Budapest is taking an increasingly independent course, raising concerns among EU partners. There are speculations that Hungarian leadership may use the situation to strengthen its position within the Union or achieve other political goals.

Disagreements over sanctions policy threaten EU unity, potentially weakening its influence on the international stage. If Hungary indeed decides to veto, it could set a precedent for other countries to express discontent and exert pressure on Brussels. The EU must develop a strategy to minimize such risks and ensure the stable functioning of its sanction mechanisms.

Technical analysis of Natural Gas (NG)

Buyers should focus on reclaiming the 3.915 level. Breaking this range would pave the way to 4.062 and 4.224, with the April 2023 level at around 4.373 as a further target. The most ambitious target is 4.800.

In case of a correction scenario, the first support level is located near 3.734. Breaking this level could quickly push the instrument down to 3.567, with the lowest target being the 3.422 range.