- Spot natural gas prices (CFDS ON NATURAL GAS) continued to decline during their early trading on Tuesday, to record new daily losses until the moment of writing this report, by -8.50%.
- It settled at $4.114 per million British thermal units, after declining during Friday’s trading by a percentage.
- During the past week, the contract fell by -11.90%, and over the course of December, the contract fell by -31.33%, while during 2022, natural gas rose for the third year in a row, by 16.33%.
Winter natural gas futures closed lower in 2022, as record warmth expected through mid-January, coupled with a quick recovery in production in the aftermath of Winter Storm Elliott, put pressure on the markets. The February Nymex gas contract fell 8.4 cents to $4.475 per million British thermal units, while the March contract fell 1.3 cents to $4.104.
Spot gas prices that traded Friday for delivery on New Year's Day through Tuesday continued to generally collapse.
In the aftermath of the effects of the devastating Elliott storm the gas market has largely turned its attention to the record warmth that quickly ensued, and just as importantly there were few signs that cold weather might return, leaving the market oversupplied with reduced demand.
On Friday the market continued to digest the latest government inventory data which was positive, but failed to push traders into buying.
The US Energy Information Administration (EIA) said that inventories for the week ending December 23 fell by 213 bcf, a much deeper pull than the previous year's draw of 125 bcf and the five-year average of 106 bcf. Notably, the triple-digit draw saw inventories fall to 3,112 Bcf, which is 133 Bcf below year-earlier levels and 85 Bcf below the five-year average.
Natural Gas Technical Analysis
Technically, the price continues its decline amid 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 of time. The negative pressure continued for its trading below the simple moving average for the previous 50-day period. In addition to that, we notice the continuation of negative signals with the relative strength indicators, despite reaching oversold areas.
Therefore, our expectations indicate that natural gas will continue to decline during its upcoming trading, as long as the 4.741 resistance remains intact, to target the 3.618 support level.
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