Spot natural gas prices (CFDS ON NATURAL GAS) continued to decline during their early trading on Thursday, to record new daily losses until the moment of writing this report, by -1.72%. It settled at a price of $3.005 per million British thermal units, after declining during yesterday’s trading by -6.46%.
Natural gas futures in the United States fell about 5 percent, to reach their lowest level in 19 months on Wednesday. These losses come amid declining cold weather forecasts and lower heating demand next week than previously expected.
This decline in prices came despite the positive expectations that call for an increase in demand for gas this week more than previously expected. Production decreased during the past two days after the cold weather led to the freezing of wells in some producing stations.
Earlier this week, the Freeport LNG terminal said its export plant was ready to start operations after a seven-month hiatus pending regulatory approval, but some analysts stuck to their earlier estimates that it would take until February, March, or even later. Until the plant actually starts drawing large amounts of working gas.
The Freeport terminal is the second largest exporter of LNG in the United States and is significant because the market expects gas prices to rise due to increased demand for it. Once the plant restarts, the facility that was shut down in a fire on June 8, 2022, can hold about 2.1 billion cubic meters per day of gas and convert it into LNG ready for export when fully operational.
Natural Gas Technical Analysis
- Technically, natural gas continued to decline in its recent trading amid the dominance of the bearish trend in the short term along a slope line, as shown in the attached chart for a period of time (daily).
- Negative pressure continued for its trading below the simple moving average for the previous 50-day period, and we also notice the resurgence of negative signals.
- With the relative strength indicators, after the price succeeded in draining its oversold areas, which was clear in the previous one, breaking the current 3.098 support level in its last trades.
Therefore, our expectations indicate that natural gas will continue to decline during its upcoming trading, especially as long as it stabilizes below 3.098, targeting the 2.432 support level.
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