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Natural Gas Technical Analysis: Price Shows More Negative Signals – 02 November 2022

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US natural gas futures fell about 10% on Tuesday, after rising 12% on Monday.

Spot natural gas prices (CFDS ON NATURAL GAS) settled lower in early trading on Wednesday, to achieve slight daily gains until the moment of writing this report. It went up by 1.85%, settling at a price of $5.453 per million British thermal units, after sharply declining by -7.15% during yesterday’s trading.


US natural gas futures fell about 10% on Tuesday, after rising 12% on Monday. Traders took profits during a period of high volatility after the latest forecast called for the weather to remain mild over the next two weeks.

The drop in prices came despite expectations of higher demand over the next two weeks than previously expected, and an expected increase in LNG exports once the Freeport LNG plant in Texas is back in service, as Freeport told PLC that buys LNG from The factory, expects to resume delivery of goods in November.

According to Refinitiv data, at least four ships were already lined up to pick up LNG at Freeport.

Despite recent price drops, US gas futures are still up about 55% this year, as rising global gas prices fuel demand for US exports due to supply disruptions and sanctions linked to Russia’s invasion of Ukraine on February 24.

Technically, natural gas is affected by the continuation of the negative pressure of its trading below the simple moving average for the previous 50-day period, and its earlier break of a major bullish trend line in the medium term.This is shown in the attached chart for a (daily) period, as we notice during the emergence of a negative crossover with indicators.The relative strength, after it reached areas of severe overbought operations, is exaggerated compared to the price movement, which suggests the start of what is known as negative divergence in it, which may add more negative pressure on its upcoming trades.

Therefore, our expectations indicate more decline for natural gas during its upcoming trading, especially in the event that it stabilizes again below the 5.455 level, to target the 4.214 support level.

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