Natural gas holds key technical support, path of least resistance remains higher


Natural gas, energy, inflation, White House, Federal Reserve, inflation – Talking points

  • Natural gas futures rose 7% on Thursday before settling down
  • Forecast of milder weather in the United States slowed the bullish momentum
  • Inventories Remain Low, Growth in Inventories Providing Negative Surprise

Natural gas prices continue to climb as market players tire of low stocks ahead of the winter season. Global energy prices have skyrocketed in recent times, and severe supply shortages now threaten the post-pandemic economic recovery. Large factories have been forced to close across Europe as rising energy costs have reduced the ability to produce products profitably. Rising gasoline prices have caught the attention of the White House, with senior officials meeting to discuss solutions to ease domestic price pressures.

Weekly Natural Gas Inventories in the United States

Courtesy of EIA

A US government report on Thursday showed natural gas inventories posted a smaller-than-expected gain, further fueling fears of a widespread shortage in the winter months. For the week ending 8/10, inventories rose 81 billion cubic feet (Bcf), below Bloomberg’s median estimate of 94 Bcf. Current month’s futures contract hit an intraday high of $ 5.964 per million U.K. thermal units, but stabilized lower as mild temperatures are expected to sweep much of the United States in the coming days . A supplemental report from the Energy Information Administration noted that U.S. homeowners could face the highest winter energy bills since 2007-08, which will put additional pressure on the Federal Reserve’s “transitional” stance on l ‘inflation.

Henry Hub Natural Gas Futures Contracts (Daily Timeframe)

Natural gas holds key technical support, path of least resistance remains higher

Chart created with TradingView

Natural gas futures have maintained key trendline support during the recent pullback, indicating that the uptrend may continue in the near term. First-month futures fell in early October after a brief test of the 2014 high of $ 6.493, finding support in the form of an ascending trendline. With the uptrend remaining intact, the price could appear to move back above $ 6.00 en route to a further test of the 2014 high. The fundamental outlook remains favorable for higher prices, despite efforts by politicians to increase the price. offer on the market. If the price reverses lower through trendline support, the price may gravitate towards the psychological level of $ 5.00 before seeing the 50 day moving average below.

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— Written by Brendan Fagan, intern

Contact Brendan, use the comments section below or @BrendanFaganFX on Twitter

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