Natural Gas Technical Analysis: Surrounded by Negative Signs – 20 March 2023
NatGasWeather said the forecast on Friday continued to show cold weather this week and again later in March, although the European weather model has shed some of its bullish bias.
Spot natural gas prices (CFDS ON NATURAL GAS) settled lower during their early trading on Friday. It achieved slight daily gains until the moment of writing this report, by 2.39%. It then settled at a price of $2.398 per million British thermal units, after its decline during Friday’s trading by -7.25%. During last week’s trading, the price decreased by -3.54%.
Natural gas futures tumbled on Friday, ending a volatile week of trading that ultimately left spot prices in a flat and limited pattern of sorts, as traders try to assess uncertain weather forecasts, spotty production estimates, and stubbornly high storage levels.
Nymex gas futures for April settled at $2.338 per million British thermal units, down 17.6 cents on the day, while the May contract fell by 18.0 cents to $2.446.
NatGasWeather said the forecast on Friday continued to show cold weather this week and again later in March, although the European weather model has shed some of its bullish bias. “It is due to a warmer detachment in the southern and eastern United States late next week,” the site added. The European model’s outlook was also “not quite as cool with the weather systems that follow on March 25th and 30th”.
However, over the past week, production has fallen by about 2 billion cubic feet per day from its highest levels in 2023. The Freeport LNG export facility in Texas has continued its path to complete work at full capacity, adding so far about 1 billion cubic feet per day to demand. The LNG plant, which was decommissioned last year following a sudden fire, is recovering approximately 2.4 bcfd of capacity.
Demand for LNG is expected to remain strong as buoyant Asian economies search for gas to replace coal and Europe demands cryogenic fuel to replace lost Russian supplies in connection with the Kremlin’s ongoing war in Ukraine.
The price controls the main bearish trend in the medium and short term along the slope line. This is with the continuation of the negative pressure for its trading below the simple moving average for the previous 50-day period.We notice the continued presence of negative signals with indicators of relative strength.
Therefore, we expect natural gas to decline during its upcoming trading, as long as the price remains stable below the resistance level of 2.748, to target the psychological support level of 2.00.
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