• Spot natural gas prices (CFDS ON NATURAL GAS) declined in early trading on Wednesday, recording slight daily losses until the moment of writing this report.
• It went down by -0.36% to settle at a price of $5.801 per million British thermal units.
• This happens after declining during yesterday’s trading by - 7.12%.

US natural gas futures fell about 12% on Tuesday, in what was already a very volatile two weeks due to expectations of cooler weather and lower heating demand through late November.

Analysts said the market also focused on unproven rumors that the Freeport LNG export plant in Texas may not return in November. There was some vague information and rumors in the market that the Freeport LNG export terminal may delay its restart until late November or even early December.

However, Freeport LNG has repeatedly said it still expects the 2.1 billion cubic feet per day export plant to return to at least partial service in November, after an unexpected shutdown on June 8 due to a pipeline explosion.

These large inventory builds could increase gas stocks to near or even above normal levels for the first time since January 2022.

Overall, gas futures are up about 67% so far this year, as rising global gas prices have fueled demand for US exports due to supply disruptions and sanctions linked to Russia's invasion of Ukraine.
 

Natural Gas Technical Analysis

Technically, the decline in natural gas comes as a result of touching the resistance of its simple moving average for the previous 50 days. This coincided with its retest of a major bullish slope line in the medium term that the price had broken earlier, as shown in the attached chart for a period (daily), considering the dominance of the corrective bearish trend in the short term.

In addition to the above and in addition to those negative pressures, we notice the start of negative signals in the relative strength indicators, after they reached areas of severe overbought. This was exaggerated compared to the price movement, starting to form a negative divergence in them.

Therefore, our expectations indicate more decline for natural gas during its upcoming trading, as long as the 6.412 resistance remains intact, to target the pivotal 5.310 support level.

(Click on image to enlarge)

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