Natural gas at multi-week support – will it break or not?

Natural gas at multi week support - will it break or not?

Natural gas fell more than eight per cent at the start of the month as the economy’s balance shifted toward a supply glut. All pipes are open and gas is flowing normally to Europe from all regions, even at high levels in some, which means that Europe will get through this winter quite easily.

At the same time, the US has increased oil and gas production to further lower global oil and gas prices, and US President Joe Biden aims to set a positive tone for  Democrats in the late 2024 presidential election.

 European gas prices are rising as European gas stocks are under pressure from a European cold front. A Dec. 7 Bloomberg report showed a liquefied natural gas (LNG) glut until at least 2025. The glut comes from several market participants increasing their supply to displace Russian supplies to Europe.

The flow of Norwegian gas is on its way to Europe with the largest volume above the five-day average. Gas tensions have been contained so far, the conflict does not threaten the flow of gas from the Middle East to Europe.

 Next, the US Energy Information Administration (EIA) publishes weekly gas inventory numbers. The previous figure was the construction of 10 billion cubic meters of gas. 105 billion euros are expected to be withdrawn. Estimates range from a low of 102 billion cubic meters to a high of 119  billion cubic meters.

Technical Outlook – Natural Gas:

The technical outlook for natural gas (December 08)

 Natural gas prices are down more than 25% since last month. Prices fell from a high of 302.40 (31/10/2023) and reached a low of 207.30 yesterday.

 In the above chart, the formation of a doji candlestick indicates a trend reversal in the near future. In addition, prices are now trading near a multi-week low of  205.00. Furthermore, the RSI is trading in oversold territory, which also indicates momentum.

A break below will soon take prices to the 198-190 mark. However, the failure of the break creates the probability of withdrawal to 225-235 again.

In addition, Inventory data later today, will provide some direction for the prices.

Commodity Samachar
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