- Spot natural gas prices (CFDS ON NATURAL GAS) stabilized on the rise during its early trading on Wednesday, recording slight daily losses until the moment of writing this report, at a rate of -1.05%.
- It settled at a price of $2.731 per million British thermal units, after rising during yesterday's and today’s trading.
- The fifth in a row, at a rate of 2.00%, during the month of February, the price decreased by -3.43%.
Natural gas futures spent the majority of Tuesday's trading session solidly in the red before a late gain sent Nymex's April gas futures contract up 1.6 cents a day to $2.747 per MMBtu, May futures also rallied.
The prospect of a cold end to the official winter season for the natural gas market offers some support overall for prices, after slipping briefly below $2.00 last week. Despite this, analysts said a return to $3.00 for gas is out of the question.
Meanwhile, on the demand side, the shift from coal to gas in the energy sector has accelerated in recent weeks due to the lower-price environment.
The Freeport LNG terminal also continues to ramp up operations, this week the LNG export terminal asked federal regulators to approve commercial operations from Train 1.
Train 3 has been safely restarted and is in full commercial LNG production operations, and Train 2 is in the process of restarting after the Federal Energy Regulatory Commission granted these approvals last week. Once fully operational, Freeport will produce about 2.38 bcfd of LNG at its facility on the upper Texas coast.
Natural Gas Technical Analysis
Technically, natural gas is trying to correct the main bearish trend in the medium and short term, in light of its trading along a descending trend 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. In addition to that, we notice that a negative crossover has begun to appear on the relative strength indicators, after they reached highly overbought areas, in an exaggerated manner compared to the price movement.
Therefore, our expectations suggest that natural gas will return to decline during its upcoming trading, especially if the resistance level at 2.727 remains stable, after which it will target the psychological support level at 2.00.
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