- Spot natural gas prices (CFDS ON NATURAL GAS) settled down during its early trading on Tuesday, achieving slight daily gains until the moment of writing this report, by 1.84%.
- It settled at $3.656 per million British thermal units, after rising slightly during yesterday’s trading by 1%.
- It reached 1.96%, during the past week the price declined by -7.68%.
The US Energy Information Administration (EIA) said on Thursday that 11 billion cubic feet was pumped into underground inventories during the week ending January 6, a rare build during what is considered one of the peak winter months.
The EIA said total gas in storage jumped to 2,902 billion cubic feet, which is about 140 billion cubic feet less than last year at this time and about 40 billion cubic feet less than the five-year average.
Lack of Heating Deman
Looking at the next two government inventory reports, the lack of significant heating demand this month is likely to boost inventories to a 150 bcf surplus to the five-year average, analysts said. This could happen when the weather turns cooler. Therefore, the weather data supported the expected demand related to the cold snap at the end of the month, overshadowing the negative inventory data.
- Technically, the rise in natural gas came as a result of the stability of the pivotal support level 3.658.
- This gave it some positive momentum to help it compensate for part of its previous losses.
- At the same time, it tries to drain some of its clear selling saturation with the relative strength indicators, especially with the start of positive signals from them.
All of this comes in light of the dominance of the bearish corrective trend in the short term along a slope line, as shown in the attached chart for a (daily) period. This is with the continuation of the negative pressure for its trading below the simple moving average for the previous 50-day period.
Therefore, our expectations suggest that natural gas will return to decline during its upcoming trading, especially if it breaks the pivotal support 3.658, to target immediately after that the first support level at 3.098.
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