Natural Gas Futures Find Support After Smaller Storage Build
November natural gas futures are trying to rebound Thursday after the EIA reported a smaller-than-expected storage build. The number gave buyers a reason to cover shorts after the contract fell to a multi-month low, but warm weather is still limiting the recovery.
At 14:42 GMT, November natural gas futures are trading $2.785, down $0.005 or -0.18%.
Daily November Natural Gas Futures Technical Analysis
November natural gas futures are trying to turn higher after hitting a multi-month low at $2.726.
The main trend is down according to the daily swing chart. The downtrend was reaffirmed earlier in the session when sellers took out yesterday’s low. A trade through $3.334 will change the main trend to up.
Due to the prolonged move down in terms of price and time, today’s session began with natural gas inside the window of time for a potentially bullish closing price reversal bottom. We’ve already seen the lower-low; now we’re waiting for a higher close to complete the chart pattern.
If confirmed, we could see the start of a two-to-three-day counter-trend rally of as much as 50% to 61.8% of the break from $3.334 to $2.726. That would make $3.030 to $3.102 a potential upside target zone. A strong counter-trend rally would also put the 50-day moving average at $3.055 back in play. A trade through $2.726 will signal a resumption of the downtrend, with $2.676 and $2.592 the next downside targets.
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See all Natural Gas forecastsDaily December Natural Gas Futures Technical Analysis
December natural gas futures are edging higher on Thursday, putting the market in a position to post a potentially bullish closing price reversal bottom. The chart pattern won’t change the main trend to up, but if confirmed, it could lead to the start of a two-to-three-day counter-trend rally.
The main trend is down according to the daily swing chart. A trade through $3.134 will signal a resumption of the downtrend. The main trend will change to up on a trade through $3.652.
Based on the current short-term range of $3.652 to $3.134, the upside objective would be the retracement zone at $3.393 to $3.454, followed by the 50-day moving average at $3.464.
Storage Report Gives Buyers Something to Work With
The EIA reported a 77 Bcf build for the week ended October 16. Traders were looking for about 80 Bcf. The difference is small, but it matters after a hard break because it shows inventories did not build as quickly as expected.
Total working gas rose to 3,644 Bcf. That is 152 Bcf below last year and only 35 Bcf above the five-year average. Storage is adequate and remains inside its normal historical range. It is not the kind of surplus that forces sellers to press the market after a sharp decline.
The report gave buyers a reason to challenge the low. It did not give them a weather-driven reason to chase the market higher.
Warm Weather Is Still the Problem
The next seven days are expected to bring light national demand. The northern United States should see mostly mild conditions, while the South remains warm. Forecasts have also turned warmer across the Midwest into early November.
That leaves natural gas caught between a storage report that was mildly supportive and a weather outlook that still limits heating demand. The market can bounce after the smaller build, but sustained buying will likely need colder forecasts or a clearer decline in supply.
What to Watch
The immediate question is whether the smaller storage build can keep buyers interested after the report. A close above the prior day’s close would complete the potential reversal-bottom patterns in November and December futures. That could trigger short-covering into the retracement targets.
My bias for November natural gas futures is to the downside, with the main swing chart pointing lower and the contract trading on the bearish side of the 50-day moving average. A confirmed closing price reversal bottom would weaken that outlook, but it would not change the main trend to up.
My bias for December natural gas futures is also to the downside. A confirmed closing price reversal bottom could lead to a two-to-three-day counter-trend rally into $3.393 to $3.454 and the 50-day moving average at $3.464. It would weaken the bearish outlook, but would not change the main trend to up.
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