Natural Gas Technical Analysis: Price Receives Positive Boost – 16 March 2022
We expect natural gas to rise during its upcoming trading.
Spot natural gas prices (CFDS ON NATURAL GAS) rose during the recent trading at the intraday levels, to achieve daily gains until the moment of writing this report, by 1.87%. It then settled at the price of $4.751 per million British thermal units, after declining in yesterday’s trading by -1.19% .
Natural gas futures fell for the second consecutive trading session on Tuesday, amid the emergence of warmer weather patterns with the possibility of increasing inventories in the coming weeks. April gas futures contracts in Nymex settled at $4.568 per million British thermal units, down about 9.0 cents on the day. The May contract fell by 8.5 cents to settle at $4.617.
Mild weather conditions are expected to be just as warm in late March, dampening market demand expectations and putting pressure on natural gas prices.
Meanwhile, the Russian-Ukrainian war, which has entered its third week, continued to create uncertainty in European gas markets and the possibility of price hikes.
The European Union has not followed the United States in banning Russian energy imports in protest of the unprovoked invasion, given the continent’s dependence on Russian natural gas. Nevertheless, the European Union has pledged to make up for Russian supplies over the course of this year. With the war intensifying and Western media reports of Russia attacking the Ukrainian capital of Kyiv with missile strikes on Tuesday, markets were watching closely to see if European countries were speeding up efforts to reduce their dependence on Russia for gas. Such developments could cut supplies and raise prices.
On the other hand, even with the continued flow of Russian gas at this stage of the war, the demand for US exports of liquefied natural gas (LNG) to Europe is increasing rapidly.
Technically, the price received some positive momentum because of relying yesterday’s trading on the support of its simple moving average for the previous 50 days. This is especially due to the arrival of the relative strength indicators to oversold areas. In light of the dominance of the main bullish trend in the medium term and its trading along a slope line, it is shown in the attached chart for a time period (daily).
Therefore, we expect natural gas to rise during its upcoming trading, if the support 4.430 remains, to target the first resistance levels at 4.954, in preparation for attacking it.