Natural Gas Technical Analysis: Amid negative expectations

Natural gas futures in the United States fell about 7% to their lowest level in a year on Tuesday, due to increased production and expectations of lower-than-expected heating demand this week.

Spot natural gas prices (CFDS ON NATURAL GAS) settled down during its early trading on Wednesday, achieving slight daily gains until the moment of writing this report, by 2.12%. It settled at $ 3.654 per million British thermal units, after a sharp decline during yesterday's trading by -8.09%.

Natural gas futures in the United States fell about 7% to their lowest level in a year on Tuesday, due to increased production and expectations of lower-than-expected heating demand this week.

Analysts say that demand for natural gas in the United States may be on track to reach record levels in January if the unusually warm weather continues.

Data provider Refinitiv said average gas production in the bottom 48 US states has risen to 98.3 bcfd so far in January, up from 96.7 bcfd in December. This compares to a monthly record of 99.9 billion cubic feet in November 2022.

With the weather expected to remain warmer than usual until late January, Refinitiv forecast that average gas demand in the US, including exports, will stabilize at 120.8 Bcfd this week and in the coming period. Forecasts for this week were lower than Refinitiv's forecasts for Monday.

Meanwhile, data from pipeline operators showed that eastbound gas flows on the Yamal-Europe pipeline to Poland from Germany and Russian gas flows to Europe via Ukraine remained stable on Wednesday morning.

Natural Gas Technical Analysis

Technically, the price suffers from the continued negative pressure of its trading below the Simple Moving Average for the previous 50-day period. This happened in light of the dominance of the bearish corrective trend in the short term and along a slope line, as shown in the attached chart for a (daily) period of time.

The price decline comes despite the beginning of a crossover It is positive on the relative strength indicators, after reaching areas that are highly saturated with selling operations. This indicates that the selling forces are in control of the price movement, to prepare, in its recent trading, to break the pivotal 3.618 support level.

Therefore, our negative expectations surrounding natural gas are still being implemented, as we expect the price to decline during its upcoming trading. Especially if it breaks the 3.618,  support level to then target directly the first 3.098 support levels.

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Akram Adel
Akram has experience working in the Forex industry since 2008. He works as a trainer and lecturer for technical analysis, trading strategies, and foundations of risk and capital management. In addition, he has experience with topics in the financial markets on many well-known sites that specialize in this field. Akram currently writes for a number of sites by providing accurate and professional articles and daily reports.