Spot natural gas prices (CFDS ON NATURAL GAS) rose during the recent trading at the intraday levels, to achieve daily gains until the moment of writing this report. Price went up by 1.52%, to settle at the price of $6.489 per million British thermal units, after declining during yesterday’s trading by - 2.31%.
US natural gas futures fell nearly 2% to a three-month low on Wednesday, pressured by record production and lower LNG exports, which should allow utilities to keep pumping more gas into storage than usual.
This drop in prices came despite expectations of cooler weather and higher heating demand over the next two weeks than previously expected.
In its monthly short-term energy outlook on Wednesday, the US Energy Information Administration said it expects US natural gas prices to average about $6.88 per million British thermal units this year. This was down 6.6% from its previous forecast and $5.77 next year, and lower than the expected 3.9% increase.
In its Winter Fuel Outlook report released as part of its Short-Term Energy Outlook, the Energy Information Administration projected that US households that primarily use natural gas to heat their homes are likely to spend an average of $931 this winter, which runs from October to March. This was a 28% increase from the amount they spent last winter.
The Energy Information Administration said in its Winter Fuel Outlook that the increase in natural gas expenditures is due to higher projected prices and consumption.
Meanwhile, the gas was traded at $45 per million British thermal units in Europe, and at $35 in Asia.
Natural Gas Technical Analysis
- Technically, the price finds positive support provided by the stability of the pivotal 6.338 support level, to prevent it from more declines, especially with the influx of positive signals on the relative strength indicators.
- Price remains under the control of a bearish corrective wave in the short term, and a negative technical pattern formed earlier.
- The head and shoulders, as shown in the attached chart for a period (daily), also suffers from the continuation of the negative pressure for its trading below the simple moving average for the previous 50 days.
Therefore, our previous expectations remain as they are, as we expect natural gas to decline during its upcoming trading, especially if it breaks the 6.338 support, and then targets the 5.75 support level.
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