- Spot natural gas prices (CFDS ON NATURAL GAS) declined in early trading on Wednesday, to record slight daily losses until the moment of writing this report.
- It went down by 0.61%, to settle at a price of $ 6.230 per million British thermal units, after rising strongly during yesterday’s trading and for the second day respectively, at a rate of 4.54%.
US natural gas futures extended their recent rally on the back of colder weather forecasts, as US natural gas futures jumped nearly 9% to reach a one-month high on Monday on expectations of cooler weather and increased heating demand in mid-April. November is later than previously expected, with a winter storm forecast to sweep the northwest US this week, bringing frigid temperatures and possibly more than two feet of snow. Normally it will cover nearly 48 lower states completely from November 12-20, which will boost heating demand for gas and lead to tightening market conditions.
Traders also said futures contracts were supported by lower production so far this month, and expectations that the Freeport Texas LNG export plant will soon return to service.Freeport LNG said it still expects the 2.1 billion cubic feet per day export plant to return to at least partial service in November, after an unexpected shutdown on June 8 due to a pipeline explosion.
Natural Gas Technical Analysis
Technically, natural gas was subjected to negative pressure after touching its simple moving average resistance for the previous 50 days. This coincided with retesting a major bullish slope line that the price had broken earlier, as shown in the attached chart for a (daily) period.
All this comes amid the arrival of the RSI indicators to overbought areas, in an exaggerated manner compared to the price movement, which suggests the beginning of a negative divergence.
Therefore, our expectations indicate a decline in natural gas during its upcoming trading at intraday levels, as long as the 6.412 resistance remains intact, to target the 5.455 support level.
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