Natural Gas Technical Analysis: Settling Higher

Spot natural gas prices (CFDS ON NATURAL GAS) stabilized on the rise during the recent trading at the intraday levels, to record slight daily losses until the moment of writing this report, by -0.26%. It settled at the price of $5.534 per million British thermal units, after rising in yesterday’s trading by It reached 4.72%.

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Natural gas futures rose on Wednesday with the Nymex May contract beginning to be treated as a spot month, building significant momentum even as domestic demand approaches fading. May futures advanced 27.5 cents on the day and settled at $5.605 per million British thermal units. The June contract rose 27.7 cents to settle at $5.658 per million British thermal units.

Natural gas markets have been volatile in recent weeks, driven more by geopolitical news than by natural fundamentals. Prior to Wednesday, US futures had faltered in the previous two days, after rising throughout the previous week.

US production held above 95 billion cubic feet on Wednesday, well above its March low of 93 billion cubic feet, according to Bloomberg.

Looking at the storage report to be released from the Energy Information Administration (EIA) later Thursday, estimates announced by Bloomberg through Wednesday show average injections of 25 billion cubic feet for the week ending March 25. Forecasts ranged from 19 billion cubic feet to 37 billion cubic feet.

For the same period last year, the EIA report recorded injections of 7 billion cubic feet, while the five-year average is 23 billion cubic feet withdrawn.

Technically, the price is preparing to attack the important resistance level 5.710, amid the dominance of the main bullish trend in the medium term along a slope line. This is shown in the attached chart for a (daily) period, supported by its continuous trading above its simple moving average for the previous 50 days. We notice negative signals started to appear on the relative strength indicators, after they reached overbought areas, which may curb the upcoming price gains.

Therefore, our expectations suggest that natural gas will rise during its upcoming trading, but we need to confirm this by first breaching the aforementioned resistance 5.710, and then targeting the pivotal resistance level 6.412.