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Natural Gas Technical Analysis: Price is Rising Again – 09 May 2022

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We expect natural gas to rise during its upcoming trading.

Spot natural gas prices (CFDS ON NATURAL GAS) rebounded in their recent trading at the intraday levels, to achieve daily gains until the moment of writing this report, by 2.63%. It settled at the price of 8.064 dollars per million British thermal units, after it declined sharply in Friday’s trading. It reached -9.53%, to break a chain that continued for five consecutive sessions, during the past week, the price rose by 10.34%, after trimming some of its gains in the last sessions of the week.

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Nymex futures for June are also higher, driven by expectations of strong natural gas demand next summer and rising US export orders for liquefied natural gas (LNG) in light of the ongoing war in Ukraine. It settled at $8.043/MMBtu to close the trading week on Friday, up 11% from the end of the previous week.

Relatively weak natural gas production in the wake of the freeze caused by a blizzard in late April interrupted with spring maintenance projects. That left about 2 billion cubic feet of production below its 2022 peaks for most of the past week.

Futures rose for most of the week, but only lost ground on Friday on profit taking, and crossed the $8 threshold, which had hit a trading high earlier in the year.

Meanwhile, Baker Hughes data showed that oil and gas rigs in the United States rose by seven to 705. Gas rigs rose by 146, and various rigs remained at two. In the same period in 2021 there were 103 gas rigs and one diversified excavator in operation. In all, there were 448 platforms in operation a year ago.

Across North America, oil and gas equipment tripled, to 796, up from 503 at the same point last year.

Technically, the price is trying to reap the profits of its recent gains in the short term. At the same time it is trying to gain some positive momentum that might help it maintain the main bullish trend in the medium and short term. This came due to its trading along major and minor ascending slope lines, as shown in the chart. The annex for a (daily) time period, amid the continuation of positive support for its trading above its simple moving average for the previous 50 days, in addition to the influx of positive signals on the relative strength indicators.

Therefore, we expect natural gas to rise during its upcoming trading, especially if its stability returns above the level of 8.073, to target again the resistance level 9.10.

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