Spot natural gas prices (CFDS ON NATURAL GAS) declined during the recent trading at the intraday levels, to record daily losses until the moment of writing this report, by -1.57%. It settled at the price of $4.622 per million British thermal units, after rising during yesterday’s trading and for the fourth session on respectively, by 5.25%.
Yesterday, natural gas futures closed nearly 10% higher, as cold weather forecasts in the US raised demand expectations. The commodity's rise was supported by lower-than-expected US weather forecasts, also with indirect support from Russia-Ukrainian tensions, supporting the possibility of an increase in US natural gas exports.
Weather remains front and center in the gas market despite it being the time of year when winter is drawing to a close. Just last week that seemed to be the case as the long-term outlook reflected an increasingly moderate pattern for the end of February and into early March.
The Energy Information Administration (EIA) is due to release its next US inventory report later Thursday, with estimates approaching another 200 billion cubic feet. If this drawdown is achieved, it will be the fifth consecutive drop of more than 200 in inventories.
Prior to the report, a Bloomberg poll showed withdrawal expectations from 182 billion cubic feet to 204 billion cubic feet, with an average withdrawal of 199 billion cubic feet. A Wall Street Journal poll also showed lower estimates of 176 billion cubic feet, with an average of 195 billion cubic feet. Reuters polled 16 analysts whose estimates ranged between 160 billion cubic feet and 208 billion cubic feet, with an average estimate of 196 billion cubic feet. NGI modeled 189 billion cubic feet of clouds.
Technically, the price retreated in early natural gas trades, aiming to reap deserved profits after a four consecutive sessions’ upward journey. This happened due to the dominance of the main bullish trend in the medium term and its trades along a trend line, as shown in the attached chart for a (daily) period of time, with the start of the influx of signals. The positivity on the relative strength indicators, after reaching oversold areas, the price also benefits from the continuation of the positive support for its trading above its simple moving average for the previous 50 days.
Therefore, we expect natural gas to continue rising during its upcoming trading, to target the first resistance levels at 4.954 in preparation to attack it, and this positive scenario will continue as long as the pivotal support level 4.214 remains intact.
