Spotlight: Natural gas prices rose over 14% last week – What next?

Natural gas price set over 14% gain last week – What next?

Natural Gas price touched sixth month high on Friday, green with traders brushing off the Nonfarm Payrolls print. Now the focus is shift on the short-term surge in demand by Egypt that is facing energy issues over the summer. By issuing a chunky tenor, markets see a squeeze in prices unfolding.

Meanwhile, the US Dollar Index, which tracks the Greenback’s value against six major currencies, is jumped over 0.81% to 104.946, posted an biggest single day gain after 10 April 2024. The move is being enlarged a bit with US equities heading in the red as well, while some safe haven flow finds its way into the Greenback. 

Forecasts for hotter US temperatures pushed prices higher.The Commodity Weather Group said that forecasts shifted warmer for much of the central, southern, and western US from June 11-15, which will boost nat-gas demand from electricity providers to power air-conditioning usage.

The outlook for warm summer temperatures in the US is a bullish factor for prices. Last Tuesday, the National Weather Service (NWS) said that “the vast majority of the lower 48 US states could see above-average temperatures for the next three months, and for a good portion of states, a hotter-than-normal summer is the most likely scenario.”

Adding to this, Thursday’s weekly EIA report was bearish for prices since inventories for the week ended May 31 rose by +98 bcf, above expectations of +88 bcf but below the 5-year average build for this time of year of +103 bcf. As of May 31, nat-gas inventories were up +13.5% y/y and were +25.1% above their 5-year seasonal average, signaling ample nat-gas supplies. In Europe, gas storage was 70% full as of June 2, above the 5-year seasonal average of 58% full for this time of year.

Technical Outlook- Natural Gas price

Natural gas witnessed over 4.5%, their biggest weekly gains since 8 January 2024. Prices made a high 247.90 and settled at 246.50.

As per the view give on 29 May 2024, has proven accurate and after breaching the resistance 218.50. Prices touched both predicted levels of 225-235.

Recent natural gas price momentum and candle stick formation is still indicating for bullishness in near future. However, prices would need to break above 249.50 in order to test next resistance 257-265.00  on the downside, support is seen at 215.00 below it 202-195

Happy Trading!

Commodity Samachar
Learn and Trade with Ease

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