Natural Gas Pulls Back Ahead Of The Weekend

Key Insights

• Yesterday’s EIA report put pressure on natural gas markets. 
• In Europe, natural gas is trading near weekly lows. 
• Natural gas remains stuck in the wide $6.30 – $7.20 range. 

Natural Gas Prices Are Moving Lower

Natural gas gained strong downside momentum and moved towards the support at $6.75 as rising inventories put pressure on prices. Yesterday, EIA reported that working gas in storage increased by 129 Bcf, compared to analyst consensus of 113 Bcf.

Interestingly, there was no significant reaction in the first hours after the release of the report. However, natural gas has ultimately found itself under pressure, settled below the $7.00 level and declined towards $6.75.

In Europe, natural gas prices moved towards multi-month lows. It remains to be seen whether this trend will be sustainable as demand will soon increase due to the start of the heating season.

Natural Gas Needs To Get Out Of The Current Trading Range To Gain Momentum

From a big picture point of view, natural gas is stuck in the wide range between the support at $6.30 and the resistance at $7.20.

Natural gas has recently made an attempt to settle above the resistance at $7.20, but this attempt yielded no results.

Currently, natural gas is moving towards the low end of the current trading range. In case natural gas settles below the support at $6.75, it will head towards the next support level at $6.55. A move below this level will push natural gas towards the key support at $6.30.

It should be noted that natural gas will not be able to gain significant downside momentum until it settles below the support level at $6.30.

On the upside, natural gas needs to get above the resistance at $7.20 to have a chance for a significant rebound. The 20 EMA is located near the $7.20 level, so natural gas will likely face strong resistance in the $7.20 – $7.30 area.

It remains to be seen whether natural gas will have enough positive catalysts for another test of the resistance at $7.20 if the working gas in storage continues to increase at a robust pace.

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