After seven consecutive weeks of drastic fall, commodity was able to gain 3.43% last week. Â It settled at 208.2 as compared to the previous week close of 201.3. Now, trading at a crucial level and will it continue to fall or pause? Everyone is thinking.
Recently, Natural gas found some support after the EIA reported that weekly U.S. inventories fell -217 bcf last week, a larger draw than expectations of -201 bcf. on Friday it closed sharply higher. As after Freeport LNG said it received federal permission to resume its exports. From its recently repaired terminal and that it will resume some shipments on Saturday. The Freeport LNG export terminal has been closed since an explosion on June 8 and has been a bearish factor for NG prices since the reduction in LNG exports has boosted U.S. NG inventories.
However, forecasts of warmer U.S. temperatures that will reduce heating demand for NG, will continue to weigh on the sentiment. Forecaster Maxar Technologies on Thursday said that the central and eastern U.S. would see warmer-than-normal temperatures through Feb 18.
NG prices fell sharply over the past two months to a 2-year low last Friday as abnormally mild weather across the northern hemisphere erodes heating demand for NG. The warm temperatures this winter have caused rising NG inventories in Europe and the U.S., with gas storage across Europe currently 69% full as of Feb 7, far above the 5-year seasonal average of 49%. Also, U.S.NG inventories are +6.7% above their 5-year average as of Jan 27, the most in two years.
Technical – trend reversal candlestick work or not?
Since 19 December 2022 Natural Gas tumbled more than 75%. It continued falling from the peak of 535.70 to recent low 196.20. However, NG future was able to recover slightly and settled at 208.2.
Weekly price action resulted in formation of inverted hammer candlestick, which is creating a probability for trend reversal in near future. But, it will need to break above its immediate resistance 233.50 in order to give pullback. NG may test 245-265.50 if it breaks and sustains above this level.
Alternatively, if Natural Gas breaks immediate support 195.50 then recent fall will continue. And NG future may test next support 185-175.00. Overall sentiment will depend on fundamental factors of NG. Hence, trade with above level