Up and down
The week seems to be a roller coaster for natural gas prices. Henry Hub reached fresh two and a half year lows on Tuesday. Natural gas’ $2 support appears to be a question of timing. This is the bears’ long-desired exit. March gas prices decreased to $2.057 per mmBtu, or one million British thermal units, while April prices hit $2.165 on Tuesday.
An unexpectedly mild start to the 2022/23 heating season has significantly reduced heating requirements in the US compared to average. This left more gas in storage than anticipated.
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The EIA (Energy Information Administration) reported on Thursday that for the week ending February 10th, gas storage stocks in the United States reached 2,266tcf. This is an increase of 17% over the previous year’s level of 1,938 tcf.
Gas prices have fallen from a 14-year top of $10 per mmBtu in August, to $7 in December and around $2 levels this week. This is the result of the weather and poor storage withdrawals.
The critical $2.00 per mmBtu level appears to have provided early and so far adequate support for natural gas prices. Wednesday’s increase was followed by a decline in open interest, which suggests that a convincing comeback is not expected at this time.
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What does technical analysis say?
So far, Thursday seems to be in favor of the bulls. The US session started with more than 4% increase. Natural gas futures for April delivery is trading well above the 2$ mark. The bears seem to have closed their positions for now.
The price channel seems to have stabilised and the trend outlook remains sideways. The Henry Hub Natural gas futures have extended the lower part of the trading range to the $2 support. The resistance remains around the $2.6 mark.
Natural gas 1D chart, source: tradingview.com, author’s analysis
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