Natural Gas Technical Analysis: Looking for Bullish Bottom

Spot natural gas prices (CFDS ON NATURAL GAS) settled on a decline in its recent trading at the intraday levels. It achieved slight daily gains until the moment of writing this report, by 0.26%, to settle at the price of $6.838 per million British thermal units, after it incurred losses in trading yesterday. For the second consecutive session, the rate was -5.85%.

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Gas prices in Europe fell on Thursday, due to weak demand, steady flows of liquefied natural gas to Europe as well as a significant oversupply in the British gas system.

Russia’s gas producer Gazprom GAZP.MM said it continued to supply natural gas to Europe via Ukraine on Thursday in line with European consumers’ demands.

Separately amid the “unprecedented supply shock” in commodity markets due to Russia’s invasion of Ukraine, any price correction is expected to be short-lived as supply disruptions continue to drive prices higher, ANZ Bank said in a report to clients.

The bank noted that among other factors, stricter sanctions on Russian supplies are expected to exacerbate supply shortages in the energy market. Russia’s oil production fell in March, Libya is facing production disruptions, while members of the Organization of the Petroleum Exporting Countries (OPEC) are facing difficulties in increasing production.

Meanwhile, rising demand for US liquefied natural gas (LNG) as buyers move away from Russian fuel has put some long-stalled US export projects back on track. Rising material and labor costs threaten to make these factories fall again.

Technically, the price is trying to search for a bullish bottom to take from it a base that might help it gain the necessary positive momentum to regain its recovery and rise again. This is in light of the dominance of the main bullish trend in the medium term along a slope line, with the positive pressure continuing for its trading above its 50-day simple moving average. We also notice in the midst of this that the relative strength indicators reached very oversold areas, and exaggeratedly compared to the price movement.

Therefore, we still expect the rise of natural gas to return during its upcoming trading, especially in the event of its stability returning above the level of 7.078, after which it will target the pivotal resistance level 8.054.