Natural gas futures posted a speculative jump yesterday, the biggest daily gain since November 2022, as winter temperatures grip much of the US.
In addition to increasing gas demand, extreme cold could cause a drop in production by freezing oil and gas wells, pipelines and other energy equipment, as happened in Texas in February 2021 and Appalachia in December 2022. The industry calls it freezing the well. – out
Before this extreme cold, there was a huge winter storm moving through the eastern United States. So far, the storm has knocked out power to more than 418,000 homes and businesses in 12 states.
The increase is due to an expected increase in heating demand, as long-range forecasts show much colder temperatures in most states over the next 6-10 days as the polar vortex moves south of Canada.
A cold blast will move into the Rockies and Midwest later in the week, with lows between -10 and 20 degrees, then spread across most of the US next week due to high demand, andquot; noted by NatGasWeather.
However, inventories remain strong, limiting prices. The Energy Information Administration reported last week that fuel inventories were 3.48 trillion cubic feet, up 13 percent from the five-year average.
Technical Outlook – Natural Gas:
Natural gas witnessed a speculative intraday jump. Prices rose by nearly 15%, the biggest one-day increase of the year. Yesterday, prices hit a two-month high of 273.80 and settled at 271.60, down from 236.70 previously.
In the 02/01/2023 outlook, prices touched all the anticipated targets of 235.50-241.50 after breaking the 224.10 resistance. After that, it jumped over 24%.
The formation of a long bullish candlestick on the above chart suggests further upside in the near future. However, prices may face huge resistance at 278.00 before next rally. Only above that, a further rise to 288-295.00 is expected. Otherwise, any short-term correction to 260.00-265.00 will attract new buying activity. On the downside, major support is at 238.50 below 229-220.
Apart from this, momentum of gas prices depends on the weather forecast. So favourable weather can reinforce bullish sentiment or vice versa.
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