Natural Gas Technical Analysis: The Price is Trying to Recoup Some of its Losses – 14 March 2023
Natural gas futures found support on Monday, posting strong gains after expectations pointed to strong seasonal demand for heating that offset losses late last week.
Natural gas futures found support on Monday, posting strong gains after expectations pointed to strong seasonal demand for heating that offset losses late last week. Nymex gas futures for April settled at $2.606 per million British thermal units. Up 17.6 cents on the day, after losing 11.3 cents on Friday, the May contract rose 16.7 cents on Monday to $2,726.
Production in the US was hovering around 100 billion cubic feet per day at the start of the week, according to Bloomberg estimates, near the highest levels of the year.
The US Energy Information Administration (EIA) recently reported a drawdown of 84 billion cubic feet of natural gas storage for the week ending March 3. The Energy Information Administration recorded a decrease of 126 billion cubic feet in the same week last year, and the five-year average was a decrease of 101 billion cubic feet.
While the total gas in storage as of March 3 was about 2,030 billion cubic feet, higher than last year’s levels, an increase of 493 billion cubic feet, and an increase of 359 billion cubic feet from the five-year average, according to the Energy Information Administration.
Technically, natural gas is trying in its recent trading to compensate for part of what it incurred from previous losses, in light of the dominance of the main bearish trend in the medium term and along a slope line. This is shown in the attached chart for a (daily) period, with negative signals coming through the relative strength indicators, after their arrival at an earlier time for highly overbought areas. At the same time, it suffers from continued negative pressure due to its trading below the simple moving average for the previous 50-day period.
Therefore, we expect natural gas to return to decline during its upcoming trading, especially if the 2.748 resistance level holds, targeting the psychological support level at 2.00.
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