- Spot natural gas prices (CFDS ON NATURAL GAS) settled lower in early trading on Thursday, to achieve slight gains until the moment of writing this report, by 2.01%.
- It settled at a price of $5.523 per million British thermal units, after sharply declining during the trading session yesterday.
- US natural gas futures fell nearly 5% to a three-month low on Wednesday, as record production and lower liquefied natural gas exports allowed utilities to keep pumping more gas into storage than usual for weeks.
The contract is down about 16% so far this week, despite expectations of cooler weather and more heating demand next week than previously expected.
November gas futures contracts in Nymex settled at $5.462 per million British thermal units, down 28.3 cents on the day, noting that sharp double-digit losses extended throughout 2023.
The drop in futures prices for four consecutive sessions is significant given that most of the US is in the middle of a cold snap that has brought temperatures below freezing and heavy snowfall in some areas.
However, with the current cold expected to abate from Friday, and production stabilizing near recent highs despite fall maintenance activities, traders saw no reason to recover. If anything, the next round of US government inventories data could bring prices down a bit if the injection comes close to expectations.
Natural Gas Technical Analysis
Technically, natural gas continued to decline amid the continuation of negative pressure due to its trading below the simple moving average for the previous 50 days, in addition to the influx of negative signals on the relative strength indicators, despite reaching oversold areas.
All of this comes in light of being affected by the breach of a major bullish slope line earlier in the medium term, as shown in the attached chart for a (daily) period.
All these negative factors make us expect the natural gas to continue declining during its upcoming trading, especially in case it breaks the current 5.455, support level, to target after that the 4.674 support level.
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