Technical analysis of natural gas: the price widens its losses
- Natural gas spot prices (NATURAL GAS CFDS) have continued to decline in recent trading at intraday levels, posting daily losses up to the time of this writing.
- It fell -0.36%, to settle at a price of $6.400 per million British thermal units, after its decline in yesterday’s session of -4.43%.
- U.S. natural gas futures fell nearly 4% on Monday to their lowest level in nearly 12 weeks, on record production, milder weather expectations and slowing demand in the over the next two weeks. This is due to persistent storm-related outages and lower LNG (LNG) exports.
Demand for gas from electric utilities declined, with some 560,000 Florida homes and businesses without power after Hurricane Ian hit the state Sept. 28-29.
U.S. futures are still up around 75% so far this year as higher global gas prices have fueled demand for U.S. exports amid supply disruptions and sanctions related to the Russian invasion of Ukraine on February 24.
US gas futures are lagging behind world prices because the US is the world’s largest producer with all the fuel it needs for domestic use. Capacity constraints and free port outages prevent the country from exporting more natural gas.
Meanwhile, data from pipeline operator Cascade showed gas flows to Eastern Europe fell to zero again on Tuesday. This happened on the Yamal-Europe pipeline to Poland from Germany after a brief recovery in the early hours of the morning.
Sweden on Monday sent a dive vessel to the site of the Nord Stream pipelines that exploded last week after explosions in the area. Their goal is to investigate an accident that has heightened the tension in Europe’s energy crisis.
Natural Gas Technical Analysis
Technically, the price is affected by a negative technical structure formed earlier in the short term, which is the head and shoulders pattern as shown in the attached chart for one (daily) period. The negative pressure for its trading below the previous 50-day simple moving average has continued, as we notice amidst this the re-emergence of negative RSI cross indicators, despite being stable in oversold areas.
Therefore, our expectations point to a bigger decline in Natural Gas in its next trade, especially in case it breaks the current support level of 6.400 and then targets the support level of 5.554.
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