Spot natural gas prices (CFDS ON NATURAL GAS) continued to decline in recent trading at intraday levels, to record new daily losses until the moment of writing this report. The index fell by 2.53%, to settle at the price of $7.632 per million British thermal units, and that decline during trading on Friday and today. Last week, the price incurred losses of -2.97% in a week that was characterized by extreme volatility.
US natural gas futures fell nearly 7%, hitting a five-week low on Friday, with production staying near a monthly record and global gas prices tumbling.
In a volatile week, prices fell in the US on Friday after also falling by about 9% on Thursday, due to a preliminary agreement to avoid a rail strike, and a larger-than-expected increase in inventories during the previous week.
In addition to higher production, the drop in gas prices in the US was also due to expectations of lower demand, when the Cove Point LNG plant in Maryland will shut down for two weeks due to maintenance work in October.
US gas demand has already been slashed for several months by the ongoing outage at the Freeport LNG export plant in Texas, which has left more US gas for utilities to pump into storage over the coming winter.
Natural Gas Technical Analysis
- Technically, the price is trying with its previous trades to correct the main bullish trend in the medium term.
- This happened while trading along an upward slope line, as shown in the attached chart for a (daily) period.
- The index also searched for a bullish bottom to take as a base that might help it gain the necessary positive momentum to regain its recovery and rise again.
It suffers in this bearish journey from the continuation of negative pressure due to its trading below the simple moving average for the previous 50 days. We also noticed the return of negative signals on the RSI indicators, to break in its recent trading the current support level 7.70.
Therefore, our expectations indicate more corrective decline for natural gas during its upcoming trading, especially throughout its stability below 7.70, to target the support level 6.761
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