Spot natural gas prices (CFDS ON NATURAL GAS) rose in early trading on Wednesday, to achieve strong daily gains, up to the moment of writing this report, by 5.99%. It settled at $5.422 per million British thermal units, after declining during yesterday’s trading for the sixth session in a row, by -4.27%.
Yesterday, US natural gas futures fell nearly 2%, hitting a five-week low on Tuesday, as the gas market was followed by a drop in crude futures, milder weather forecasts, and lower demand for gas next week than previously expected. This mild weather will allow utilities to pump more natural gas into storage, while gas inventories have stabilized at 2.4% below the five-year average (2017-2021) for this time of year.
Meanwhile, economists don't expect Freeport to return until January, February, or even later because federal pipeline safety regulators will likely take longer than Freeport thinks to review and approve a plant restart plan once the company submits it. However, two ships remained in the Gulf of Mexico to pick up LNG from Freeport.
Despite the price drop, US gas futures are still up about 46% so far this year, as higher global prices fuel demand for US exports due to supply disruptions and sanctions linked to Russia's invasion of Ukraine.
Data provider Refinitiv said average gas production in the bottom 48 US states has risen to 99.6 bcfd so far in December, up from 99.5 bcfd in November.
Elsewhere, Russia's Gazprom said on Wednesday it will ship about 42.4 million cubic meters of gas to Europe via Ukraine today, a volume in line with recent days.
Natural Gas Technical Analysis
Technically, the price gained some positive momentum after its build-up and the stability of the pivotal support level 5.310, to try to compensate part of what it incurred from previous losses. At the same time, it tries to drain some of its clear oversold by RSI indicators, especially with the start of a positive intersection appearing in them. It is under the control of the bearish corrective trend in the short term, along a slope line, as shown in the attached chart for a (daily) time, with negative pressure continuing for its trading below the simple moving average for the previous 50-day period.
Therefore, our expectations suggest that natural gas will return to decline during its upcoming trading, especially if it breaks the 5.310 support, to then target the 4.430 support level.
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