Natural Gas Technical Analysis: The Price is Under Negative Pressure – 27 March 2023
Traders on Friday also took note of the strong seasonal storage result and expectations for another positive reading in the week ahead.
Natural gas prices fell in four out of five sessions last week, mostly as forecasts of warm weather at this time of year sapped demand. Meanwhile, production in the US has stabilized near 100 bcfd – close to standard levels.
Traders on Friday also took note of the strong seasonal storage result and expectations for another positive reading in the week ahead. Positively with a withdrawal of 55 Bcf in the previous year and a five-year average decline of 45 Bcf. The decline brought inventories down to 1,900 billion cubic feet.
Futures markets have been under pressure for most of 2023 again over the past week on the back of a near-term supply-demand imbalance. The Inventories report from the EIA released on Thursday while moderately positive did little to change the market’s mood, and the cold conditions that extended into mid-March could lead to another relatively large drag. Early estimates for the week ending March 24 ranged between 38 billion feet cubic feet to 76 billion cubic feet, with an average decrease of 55 billion cubic feet.
Technically, natural gas suffers from the dominance of the main bearish trend in the medium and short term, in light of its trading along a descending trend line. This is shown in the attached chart for a period of time (daily), amid continuing negative pressure for its trading below the simple moving average for the previous 50-day period. In addition to that, we notice the presence of negative signals in the relative strength indicators, although they are stable in oversold areas.
Therefore, our negative expectations surrounding natural gas remain ahead, as we expect more declines in the price to target the psychological support level near 2.00.
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