- Spot natural gas prices (CFDS ON NATURAL GAS) continued their narrow sideways movements during their early trading on Thursday.
- It achieved daily gains up to the moment of writing this report, by 2.72%, to settle at $2.603 per million British thermal units.
- This happened after declining during yesterday’s trading by -4.81%.
US natural gas futures traded around $2.5 per million British thermal units in February, holding near their lowest in two years. Investors weigh supply and demand expectations ahead of a federal report expected to show last week's storage drawdown was Smaller than usual, as the mild weather has reduced the demand for gas for heating.
Meanwhile, the Freeport LNG terminal, the second largest LNG export terminal in the United States, resumed LNG export this week after an 8-month hiatus due to a sudden fire last June, which raised the amount of gas flowing to LNG export plants.
Separately, average gas production in the 48 southern US states has fallen to 97 bcfd so far in February from 98.3 bcfd in January.
Meanwhile, the National Oceanic and Atmospheric Administration (NOAA) warned that a winter storm will affect the US southwest and move northeast into the plains this week. However, temperatures are expected to remain mostly near normal except for some cold days.
In its February report, the Energy Information Administration forecast that the natural gas price at Henry Hub will average around $3.40 per million British thermal units in 2023.
Natural Gas Technical Analysis
Technically, the price is trying in its recent trades to compensate part of what it incurred from previous losses, with the support of the stability of the support level 2.432. It gained some positive momentum, in addition to the presence of positive signals on the relative strength indicators.
However, the dominant trend remains the main bearish trend in the medium and short term, with continued negative pressure for its trading below the simple moving average for the previous 50-day period. Relative strength indicators have 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 it breaks the 2.432 support, to then target the main support level at 2.00
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