Spot natural gas prices (CFDS ON NATURAL GAS) fell during their early trading on Thursday, to record daily losses until the moment of writing this report by -0.24%. It settled at $5.435 per million British thermal units, after rising slightly during yesterday’s trading to break a series of losses. It continued for three consecutive sessions, at a rate of 2.25%.
U.S. natural gas futures settled near an eight-week low on Wednesday. The market offset colder short-term weather that has already slashed production due to frozen oil and gas wells while boosting heating demand, against a moderate long-term forecast.
It's cold now in most parts of the US, but if current forecasts are correct and the weather turns out to be warmer than usual in late December and early January, utilities should be able to leave more gas in storage closer to the start of the new year. Gas inventories are currently about 0.4% below the five-year average (2017-2021) for this time of year.
Traders said the biggest market uncertainty that remains so far is around when the Freeport LNG export terminal in Texas will restart. A source familiar with the matter said Freeport was using the gas to maintain a flaring system at the station.
By the time the Freeport plant is back in operation, US gas demand will increase. The plant can convert about 2.1 billion cubic feet per day of gas into LNG for export, which is about 2% of daily US production.
Natural Gas Technical Analysis
Technically, the price suffers from continued negative pressure due to its trading below the simple moving average for the previous 50-day period. In addition to the presence of negative signals in the relative strength indicators, considering the dominance of the short-term bearish corrective trend along the slope line. This is shown in the attached chart for a (daily) time. Now, the price is preparing to break the pivotal support level 5.310.
Therefore, we expect natural gas to decline during its upcoming trading, especially if it breaks the aforementioned 5.310 support, to then target the 4.200 support level.
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