Natural Gas Outlook | Will Natural Gas Test the Waters of Key Support Levels?

Natural Gas Outlook | Will Natural Gas Test the Waters of Key Support Levels?

Natural gas witnessed nearly nine percent fall since the start of the week.  Prices retreated towards  a two week low pressured by record output, mild weather and data showing a bigger than expected storage build last week.

Prices fall significantly after weekly EIA nat-gas inventories rose +97 bcf, much higher than expectations of +83 bcf. Nat-gas prices were also undercut by warmer weather that is expected in much of the eastern U.S. while weather in the western U.S. is cooler, cutting gas demand for heating and air conditioning. Maxar Technologies said the remnants of the West Pacific Typhoon Bolaven will keep temperatures cooler along the West Coast over the next two weeks and warmer in the eastern two-thirds of the U.S.

Prices touched an 8-month high at the start of the month on concerns about global supplies after Chevron shut down a nat-gas production field in Israel because of safety concerns tied to the Israel-Hamas conflict. As a result of the drop in fuel flows, Egypt said it is re-examining plans to export LNG to Europe..

There are broader concerns related to the conflict’s possible escalation and potential Iranian involvement, which could pose security risks for Qatari liquefied natural gas (LNG) vessels transiting through the Strait of Hormuz.

However, price gains have been limited amid average temperatures and strong winds which curbed demand in the power sector.

Natural Gas Outlook | Technical Data:

Natural gas prices turned negative on 9 October 2023. Prices retreated more than 10% from the peak of 289.00. Recently it made a low 244.20 and traded at 245.90, down 4.06%.

On the above chart, prices are trading at very decisive levels. A cluster of indecisive candle sticks is anticipating an indecision amongst the traders as of now.

On the downside, crucial support is seen at 229.50 and break below it prices could retreat towards 215-205.00.  Else, failure of the break will create an probability for upside move towards  258-275 again.

Hence traders can take a risk for above upside levels in near future.