Spot natural gas prices (CFDS ON NATURAL GAS) continued to decline during early trading on Tuesday, recording new daily losses as of the moment of writing this report, by -1.97%. It settled at $5.674 per million British thermal units, after falling sharply during yesterday's trading. by -10.02%.
Natural gas futures fell yesterday for the second day in a row, as weather forecasts for later this month and early next month point to milder conditions that will dampen demand.
Nymex natural gas futures for January settled at $5.851 per million British thermal units Monday, down about 74.9 cents on the day, and the February contract was down about 59.3 cents to $5,710.
At the same time, there is still uncertainty about when the Freeport LNG export terminal will restart. Once Freeport is back, demand for gas will rise. The plant can convert about 2.1 billion cubic feet per day of gas into LNG for export, which is about 2% of US daily production.
Gas futures are up about 62% so far this year, as rising global prices have fueled demand for US exports due to supply disruptions and sanctions linked to Russia's war in Ukraine.
Meanwhile, production in the US held steady on Monday at around 98.5 bcfd, already below its highest levels of the month near 100 bcfd.
Natural Gas Technical Analysis
Technically, the bearish corrective trend dominates the movement of natural gas in the short term and along a slope line, as shown in the attached chart for a period of time (daily), to surpass yesterday’s trading the support of its simple moving average for the previous 50-day period. This will double the negative pressures on its upcoming trading, especially with Negative signals started coming from the relative strength indicators, after reaching highly overbought areas.
Therefore, our expectations are moving towards a further decline for natural gas during its upcoming trading, as long as the 6.412 resistance remains intact, to target the pivotal 5.310 support level.
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