Natural gas has paused its recent drastic fall and recovered more than 20% . It recovered from the low 163.4 of 22 February 2023 to yesterday’s high of 231.70.
The most-active April gas contract on the New York Mercantile Exchange’s Henry Hub settled Wednesday trade at $2.846 per mbtu.
The recovery is part technical and part fundamental. Bulls had been screaming week after week since the year began that charts showed gas oversold beyond justification.
On the weather end, while temperatures had been warmer than usual, leading to a stunning storage pile up in gas. Sporadic days between the warm ones also did not warrant a selloff to $1 territory, some say.
The event that most traders are looking toward as justification for this price rally is current weather models shifting colder in the 10-15 day outlook shown in the GFS model”. Houston-based energy markets service Gabler & Associates said, referring to the leading U.S. weather model.
Temperatures in middle of March are expected to be far below 10 year normal. This shift has added 4 billion cubic feet to the expected forecast demand from yesterday’s forecast. And well over that from this past Friday.
HDDs have been well below the 3-year range, but as of late. weather forecasts shifting cooler have brought HDDs much more in line with the 3-year normal.”
Storage of natural gas stood at a total 2.195 trillion cubic feet, or tcf, as of the week ended Feb. 17 — up 22% from the year-ago level of 1.8 tcf. HDDs, used to estimate demand to heat homes and businesses. Meaure the number of degrees a day’s average temperature is below 65 Fahrenheit (18 Celsius).
Also in the gas bulls’ corner was improving feed demand for liquefied natural gas with a steady pickup in volumes going into the Freeport LNG terminal in Texas. Which has been slowly getting back to normal operations after a fire in June.
Technical View- Natural gas may face resistance of 232.80
Natural gas paused its recent fall, and recovered more than 20% from the last two week. It made a low 163.4 on 22 Feb and recovered to the recent high 231.70.
On the above chart, Natural gas prices traded near to massive resistance 232.80 which coincided with its previous swing support.
A break above will lead further upside momentum. And prices may test next resistance 244.50-255 very soon.
Alternatively, if prices are unable to break it on a closing basis. Then will create a probability for correction in days to come. Below 226.50 Natural gas may retreat towards immediate support 218.50-212.50.
Alert – Natural gas inventory is due to be released at 9pm today. Hence volatility could expect according to.
Hence trade cautiously.