Natural Gas Technical Analysis: Price Settles Down

Spot natural gas prices (CFDS ON NATURAL GAS) slightly increased in their recent trading at the intraday levels, to achieve daily gains until the moment of writing this report by 0.51%, after it also rose slightly in yesterday's trading by 1.88%.

European natural gas prices fell sharply on Wednesday, after a strike by Norwegian oil and gas workers threatened to put further pressure on a market already under heavy pressure from the Russian war in Ukraine.

Natural gas futures rebounded early Wednesday, as production fell and demand due to near-term weather remained elevated. However, the spot month fell by midday as traders digested expectations for a strong storage injection, and struggled to regain momentum.

Gas futures for August in Nymex eventually fell 1.3 cents on the day and settled at $5,510. The September contract fell by about half a cent to $5.482 / million British thermal units.

The US Energy Information Administration (EIA) inventory report due for release on Thursday, covering the week ending July 1, is likely to carry increased importance in the market after consecutive bearish accumulations, and the price may swing in either direction as the natural gas market looks to establish stronger support.

The results of a Bloomberg survey showed that the average injection is estimated at 75 billion cubic feet. The forecast extended from 70 billion cubic feet at the minimum to 85 billion cubic feet at the maximum.

Technically, the price settles below the resistance level 5.660, amid the dominance of a bearish corrective wave in the short term, with the continuation of negative pressure for its trading below the simple moving average for the previous 50 days, as shown in the attached chart for a period of time (daily), but in front of that we notice the influx of positive signals. Relative strength indicators helped the price to consolidate until that moment.

Therefore, our forecasts indicate a decline in natural gas during its upcoming trading, especially throughout its stability below the level of 5.660, to target the support level of 4,742.