Our expectations indicate more ascent for natural gas during its upcoming trading.
Spot natural gas prices (CFDS ON NATURAL GAS) rose in their recent trading at the intraday levels, to achieve daily gains until the moment of writing this report, by 2.02%. It settled at the price of $6.717 per million British thermal units, after rising during trading yesterday and for the second day in a row by It reached 2.82%.
Natural gas futures extended gains supported by hotter long-term weather forecasts, a drop in US domestic production and positive technical momentum to rally the spot month before expiration.
The Nymex contract for July was up at $6.551/MMBtu, up 5.0 cents on the day, and the August contract that moves into the front month on Wednesday settled 2.4 cents higher at $6,570.
Spot gas prices also boosted NGI’s Spot Gas National Avg with huge gains of 50 cents or so across several US locations, rising about 39.5 cents to $6,480.
Meanwhile, the US National Hurricane Center (NHC) was monitoring a tropical turbulence in the northern Gulf of Mexico (GOM). As of Tuesday afternoon, the system had a 40% chance of hurricane formation in the next 48 hours as it remained disorganized. However, some developments and updates are possible as it is slowly moving west or between west and southwest and is approaching the Texas coast in the next couple of days.
“Regardless of the hurricane, heavy rain is likely to hit parts of the Texas coast later this week,” NHC meteorologists said.
Technically, the price’s rise came as a result of the start of positive signals on the relative strength indicators, after reaching oversold areas. This is in light of 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. In front of that, it remains with negative pressure due to its trading below the simple moving average for the previous 50 days, and under the control of a bearish corrective wave in the short term.
Therefore, our expectations indicate more ascent for natural gas during its upcoming trading, provided that the support level 6.361 remains intact, to target the first resistance levels at 7.368.