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Natural Gas Technical Analysis: Price is Taking Profits

Prices are being supported by strong demand for US liquefied natural gas exports that are hovering close to capacity.

Spot natural gas prices (CFDS ON NATURAL GAS) declined in the last trading at the intraday levels, to record daily losses.Until the moment of writing this report, the index dropped by -2.86%, to settle at the price of $8.856 per million British thermal units.This happened after it rose sharply during the trading of yesterday and today, the fifth in a row, with a increase of 8.27%.


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October gas futures on Nymex rose 83.0 cents a day and settled at $9.114 per million British thermal units, marking the biggest jump in the latest rally. November gas futures gained 83.3 cents, settling at $9.167.

NGI’s Spot Gas National Avg spot prices rose 28.0 cents to $8.155, extending their rally for three consecutive days amid the return of summer warmth in the center of the country.

Prices are being supported by strong demand for US liquefied natural gas exports that are hovering close to capacity. This happened because Europe rushes to fend off an energy crisis accelerated by Russia’s war in Ukraine. Russia, long a major supplier of gas to the continent, has cut the bulk of pipeline shipments to countries across Europe. At the same time, Asian nations are now ramping up their calls for liquefied natural gas as they move quickly to boost supplies ahead of winter.

Expectations of another lower-than-normal weekly rise in US natural gas inventories may add support to the market, as the Energy Information Administration will announce its weekly data later Thursday.

Expectations indicate an increase in inventories by about 71 billion cubic feet last week. If those expectations are confirmed, they will be 11 billion cubic feet less than the five-year average for the same week. This would cause the storage deficit to increase over the current 11.5%.

Meanwhile, the Paris-based International Energy Agency cut in its monthly report that in Europe high natural gas prices are expected to push power plants to switch to crude oil. This would boost oil demand by 700,000 barrels per day in the six months to March 2023.

Technically, prices are retreating in the early trading today, to reap the profits of their recent rises. The index is also trying to gain positive momentum that may help it maintain that bullish wave, considering the dominance of the main bullish trend in the medium term along a slope line. In addition, continued positive support for its trades above its simple moving average for the previous 50 days period and the influx of positive signals on the RSI indicators are also contributing to this momentum.

Therefore, our expectations suggest that natural gas will rise during its upcoming trading, to target the pivotal 9.70 resistance level.

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