- Spot natural gas prices (CFDS ON NATURAL GAS) stabilized on the rise during its early trading on Thursday, recording slight daily losses until the moment of writing this report, at a rate of -1.61%.
- It settled at a price of $2.751 per million British thermal units, after its rise during yesterday’s trading.
- For the sixth day in a row, it increased by 1.30%.
Natural gas futures extended gains on Wednesday, as traders focused on falling production and forecasting cold March weather. Nymex gas futures for April settled at $2.811 per million British thermal units, an increase of 6.4 cents per day. The May contract rose by 8.0 cents to $2,943.
Production in the US fell on Wednesday to less than 98 billion cubic feet per day, down from recent highs of around 100 billion cubic feet per day, according to Bloomberg estimates.
Many US exploration and production companies said during the latest earnings reporting season that they will likely cut production this year. This happened after a mild second half of winter and lower prices compared to last year, but despite the recent rally, prices in the spot month are about half their level in late March. 2022.
Meanwhile, demand for liquefied natural gas at the Freeport terminal approached a record high of 1.0 billion cubic feet per day this week. This indicates the imminence of a full restart of the station that was suspended due to a sudden explosion last June, which will add significantly to demand.
Traders are now awaiting the weekly domestic natural gas inventories report by the US Energy Information Administration (EIA) due later in the day Thursday. Estimates of withdrawal range from 66 bcf to 84 bcf, a Reuters poll showed, with an average withdrawal of 76 bcf. While a Bloomberg survey found a narrower range of estimates came to an average withdrawal of 74 Bcf, a Wall Street Journal survey ranged from 66 Bcf to 78 Bcf and showed an average withdrawal of 74 Bcf.
Natural Gas Technical Analysis
Technically, natural gas, with its recent rises, retested the important resistance level of 2.752, as an attempt to compensate for part of its previous losses. It corrected the main bearish trend considering its trading along a bearish trend line in the short term, as shown in the attached chart for a (daily) time period. This happened amid continued negative pressure for its trading below the simple moving average for the previous 50-day period, in addition to the start of a negative intersection with the relative strength indicators, after reaching overbought areas.
Therefore, our expectations suggest that natural gas will return to decline during its upcoming trading. Especially if the resistance level at 2.752 remains stable, targeting the psychological support level at 2.00 again.
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