• XAU
    2010.5 USD 0.48%
  • XCU
    3.73 USD -1.34%
  • XPD
    1478 USD -0.78%
  • XPT
    1048 USD 0.64%
  • ALU
    2243.47 USD -2.23%
  • RICE
    18 USD -1.75%
    74.17 USD -1.32%
    14.35 USD -0.66%
  • NG
    2.27 USD 0.27%
    256.22 USD -1.15%
    70.04 USD -2.02%
  • XAG
    23.96 USD -0.14%

Natural gas breaks out of the selling spree – will gas finally rally?

It looks like the short-term upswing on gas could continue amid colder weather.

Bear market seems over, for now

Following Wednesday’s drop to the lowest level since September 2020 at $1.967, which marked the bottom of a three-month-long gas bear market triggered by exceptionally warm winter weather, natural gas has jumped notably. The price of natural gas increased by more than 1% on Thursday as the short-term trend became bullish. During the start of the US session, gas was trading at $2.85.

Short covering in the futures market has been ramping up since last Friday, providing the gas market with ample buying pressure,” Houston-based energy markets advisory Gelber & Associates said in its daily note on gas futures.

Don’t miss: Copper rebounds off massive support – can it stay above $4?

A steady increase in volumes is entering the Freeport LNG facility in Texas, which has been gradually resuming regular operations since a fire in June. This has also been positive for gas bulls.

During seven trading days, the front-month futures contract for the heating fuel has gained 85 cents, or 40%, as of Monday’s closing. Moreover, analysts predict an increase in the US heating demand over the following two weeks as a result of colder-than-normal temperatures in early March.

Mergers and acquisitions

Enbridge Inc said it would acquire a gas storage facility in the US Gulf Coast region for $335 million. This acquisition will be from Brookfield Infrastructure Partners and Crestwood Equity Partners.

You may also read: Rally in crude oil seems short lived – where is oil heading now?

The Tres Palacios gas storage facility supports Texas and Mexico’s gas-fired power generation. This transaction is anticipated to conclude in the second quarter. The pipeline operator also stated that it has chosen to proceed with the $240 million Enbridge Houston Oil Terminal development project.

A clear breakout

In terms of technical analysis, the price has definitely surpassed the previous swing highs in the $2.60 range, confirming the bottom at $2 and beginning to develop positive momentum. The next objective for bulls might be the psychological level of $3, with a potential rally to the previous consolidation zone at $3.50.

Conversely, if bears were to return to the market, $2.60 would serve as support. The price of natural gas might return to $2 if that support is not maintained.

Natural gas

Natural gas futures 1D chart, source:, author’s analysis

Tomáš is a financial reporter with US markets as his main field. Tomáš is an aspiring author and entrepreneur aspiring to help people get better in financial knowledge.


Post has no comment yet.

Want add your comment? Sign up or Sign in