- Spot natural gas prices (CFDS ON NATURAL GAS) settled down during its early trading on Thursday, recording slight daily losses until the moment of writing this report, by -0.04%.
- It settled at $2.621 per million British thermal units, after declining during yesterday’s trading by 0.04%, amounted to -8.29%.
Natural gas futures failed to sustain the positive momentum and slid lower in the middle of the week. Traders shrugged off possible temporary production declines related to the cold weather that froze production plants and focused instead on the expected build-in inventories by the end of this week. The March Nymex contract settled on Wednesday at $2.468 per million British thermal units, down 21.6 cents from Tuesday's close.
Most of the 48 southern US states are still mired in days of freezing temperatures, leaving a large portion of inventories depleted this week as demand ramps up. Estimates put production down slightly to about 96 bcfd on Wednesday, far from the highest Its record levels have been at around 100 billion cubic feet per day in recent weeks.
The drop in production is similar to that seen in late December when widespread cold froze in the Permian, Rocky, Baken Shale, and Appalachia basins, and then, as expected now, quickly recovered as temperatures rose.
Meanwhile, Freeport LNG is showing additional signs that it is heading toward a restart. The LNG export terminal has sought federal approval to restore feed gas production to one of its three trains, more than seven months after a fire and explosion shut down its Texas plant.
A mostly mild winter has left stockpiles fairly comfortable with only weeks left of the peak winter season. Moreover, Thursday's government stocks are likely to show a further improvement in the stockpiling picture.
Estimates ahead of the US Energy Information Administration's (EIA) weekly storage report due later in the day showed withdrawals from 133 billion cubic feet to 155 billion cubic feet.
Natural Gas Technical Analysis
Technically, the price continues its decline amid the dominance of the main bearish trend in the short term along a slope line, as shown in the attached chart for a (daily) period of time. Negative signals came through the relative strength indicators, despite reaching highly oversold areas and considering the continuation of the negative pressure It traded below the simple moving average for the previous 50 days.
Therefore, we continue to expect a further decline for natural gas during its upcoming trading, as long as it stabilizes below 3.098, targeting the first support level at 2.432.
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