Natural Gas Technical Analysis: Price is Settling Higher

Spot natural gas prices (CFDS ON NATURAL GAS) stabilized at an increase during the recent trading at the intraday levels, to achieve slight daily gains until the moment of writing this report, by 0.16%. It settled at the price of $4.942 per million British thermal units, after declining in Fridays trading by It reached -0.80%. During the past week, natural gas rose by 2.15%.

Natural gas futures fell on Friday after a two-day rally, as markets digested forecasts of warmer weather and new shutdowns to combat the coronavirus outbreak that could signal the looming effects of the pandemic on global energy demand. April gas futures contracts in Nymex settled at $4.863 per million British thermal units, down 12.7 cents on the day. The May contract fell 11.9 cents to $4.902.

Meanwhile, mid-range weather models were warmer Thursday through Friday, according to NatGasWeather. A short bout of cold air is still expected in northern US states from March 26-28, but it is “not quite as cold” as previous forecasts. After that the company expects to resume the “warmer trend” pattern in the last days of the month through April, reducing gas demand.

Meanwhile, production remained below its early-month high of 95 billion cubic feet but rose above 94 billion cubic feet on Friday - after hovering around 93 billion cubic feet earlier in the week, according to Bloomberg estimates.

In the Russian-Ukrainian war, world leaders are pushing for an investigation into Russia's repeated attacks on civilian targets, including air strikes on schools, hospitals, and residential areas. After the Kremlin said on Friday that Russian President Vladimir Putin had told German Chancellor Olaf Schulz in a phone call that Ukraine was suspending talks with “unrealistic proposals,” according to news reports. Separately, US President Joe Biden and Chinese leader Xi Jinping held talks on Friday, with the US threatening action if China supports Russia in its war with Ukraine.

Technically, the price settled at the resistance level 4.954. This is the resistance that we had referred to in our previous reports, to gather the positive momentum needed to breach it. This is due to the influx of positive signals on the relative strength indicators, and under the control of the main bullish trend in the medium term along a slope line. This is shown In the attached chart for a period of time (daily), and is also benefiting at the same time from the positive support due to its trading above its simple moving average for the previous 50 days.

Therefore, we expect natural gas to rise during its upcoming trading, especially if it breaches the resistance 4.954, and then targets the resistance level 5.710.