Spot natural gas prices (CFDS ON NATURAL GAS) jumped up in early trading on Wednesday, to achieve strong daily gains until the moment of writing this report.
Spot natural gas went up by 8.07%, to settle at a price of $6.480 per million British thermal units, after rising during Friday’s trading by as much as $6.480 per million British thermal units. Last week, prices increased by 14.04%.
Natural gas futures prices extended their gains, after US natural gas futures jumped about 7%, reaching a three-week high in trading on Friday. This happened at the end of an extremely volatile week of trading due to expectations of cooler weather and increased heating demand.
Futures also gained support from lower production so far this month, and expectations that the Freeport Liquefied Natural Gas (LNG) export plant in Texas will soon return to service, according to traders.
Freeport LNG said it still expects its 2.1 billion cubic feet per day export plant to return to at least partial service in early to mid-November after an unexpected shutdown on June 8 due to a pipeline explosion.
Overall, gas futures are up about 72% so far this year, as higher global gas prices fueled demand for US exports due to supply disruptions and sanctions linked to Russia’s invasion of Ukraine. Meanwhile, Russian energy giant Gazprom said on Monday it had completed the inspection of the floating storage unit, Marshal Vasilevsky, and re-transfer gas to the western Kaliningrad region.
Natural Gas Technical Analysis
- Technically, natural gas prices rose in their recent trading to retest a major bullish slope line that the price had broken earlier, as shown in the attached chart for a (daily) period, in conjunction with retesting the 6.412 resistance level.
- Relative strength indicators reached very saturated areas in an exaggerated way compared to the price movement.
- This suggests the beginning of a negative divergence in it, and in light of the continuation of the negative pressure of its trading below the simple moving average for the previous 50 days.
Therefore, our expectations suggest a return to the decline of natural gas during its upcoming trading, as long as the 6.412 resistance remains, to target the 5.455 support level.