Natural Gas Tests Support At $6.75

Key Insights

• Natural gas markets are moving lower due to the negative impact of Hurricane Ian.
• Traders fear that storage levels will increase at a robust pace. 
• A move below $6.75 will push natural gas towards the support at $6.55.

Natural Gas Markets Are Losing Ground On Demand Worries

Natural gas remains under pressure as cooler weather and reduced demand after Hurricane Ian put pressure on demand.

Hurricane Ian left a path of destruction, which is bearish for natural gas markets. Until the power is restored in the affected areas, demand will remain under pressure.

In addition, the upcoming EIA report will likely show that working gas in storage continues to increase at a robust pace, which will be bearish for natural gas markets.

In Europe, natural gas prices are falling despite recent explosions in Nord Stream pipelines. The key driver for this move is the weak demand due to the rapid slowdown for the European economy.

In the near term, the dynamics of U.S. natural gas markets will depend on whether demand picks up swiftly after Hurricane Ian. From a big picture point of view, natural markets may remain under material pressure as working gas in storage will likely grow at a fast pace in the upcoming weeks.

Natural Gas Is Trying To Get Below The Key Support Area

Currently, natural gas is trying to settle below the support at $6.75. If natural gas settles below this level, it will move towards the next support level, which is located at $6.55. It should be noted that natural gas received strong support in the $6.55 – $6.75 range in recent trading sessions, so it may need additional catalysts to settle below the $6.55 level.

If natural gas declines below the support at $6.55, it will head towards the support at $6.30. A successful test of the support at $6.30 will push natural gas towards the support at $6.00.

On the upside, natural gas needs to settle back above $6.75 to have a chance to gain upside momentum in the near term. The next resistance level for natural gas is located at $6.90. If natural gas moves above this level, it will head towards the resistance at $7.20. A successful test of the resistance at $7.20 will open the way to the test of the next resistance at the 20 EMA at $7.50.

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