Natural Gas Technical Analysis: Price Consolidating Gains

Spot natural gas prices stabilized at an increase in its recent trading at intraday levels, to achieve slight daily gains until the moment of writing this report by 0.81%, after it rose in yesterday’s trading by 5.26%.


Natural gas found support from continued weakness in production and expectations of hotter weather inside the United States that boosted strong demand, with the August contract in Nymex rising by 52.6 cents a day to close at $6,689 per million British thermal units, while the September contract rose by nearly 56.8 cents to $6.589.

The National Oceanic and Atmospheric Administration is forecasting higher-than-normal temperatures across the US, with the exception of part of the West and a small section of the Southeast, likely to maintain strong fuel demand and strengthen US market balances.

Meanwhile, amid a series of maintenance-related outages, production fell below 94 billion cubic feet on Tuesday from recent highs near 96 billion cubic feet and did not budge from estimates on Wednesday. This raised concerns about an imbalance between supply and demand as the summer heat continues as the government’s next inventory report looms covering the week ending July 8.

Bloomberg survey results showed average injections at 58 billion cubic feet, with a low estimate of 53 billion cubic feet and a high of 72 billion cubic feet. While the Reuters survey produced estimates for injections that ranged from 48 to 69 billion cubic feet, they fell at an average of 57 billion cubic feet.

Technically, natural gas rises amid the dominance of the main bullish trend in the medium term along a slope line, as shown in the attached chart for a period of time (daily). But in front of that it is dominated by a bearish corrective wave in the short term, with the negative pressure continuing for its trading below the simple moving average for the previous 50 days, in addition, we notice the beginning of a negative crossover with the relative strength indicators, after it reached the areas of severe overbought, and exaggeratedly compared to the price movement, which suggests the start of negative divergence in it, which doubles the negative pressures on its upcoming trades.

Therefore, our expectations suggest a decline in natural gas during its upcoming trading, in an attempt to search for a bullish bottom, especially in the event of its stability returning below the 6.361 level, after which it will target the support level 5.660.

Natural Gas

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