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Market update: bullish natural gas


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Natural gas prices jumped 14% last week – the biggest weekly gain since mid-June; recent drivers include cooler weather, smaller inventory build and higher exports so what are the key levels to watch?

 

original-size.webpSource: Bloomberg

 

 Manish Jaradi | IG Analyst, Singapore | Publication date: Wednesday 11 October 2023 02:26

Natural gas could be set for a material rebound: it rose to an eight-month high last week on higher heating demand, smaller-than-expected inventory build, and rising exports.

Natural gas rose 14% last week, the biggest weekly percentage increase since mid-June. LSEG forecast US gas demand, including exports, would rise in the coming two weeks. On technical charts, natural gas’ break above crucial resistance at the March & August highs of 3.03 has triggered a significant break out from an eight-month-long sideway range.

Natural gas daily chart

 

original-size.webpSource: TradingView

Natural gas technical analysis

The price objective of the pattern points to a rise to around 4.00-4.10 in the coming weeks. Last week's jump was also associated with a rise above the 200-day moving average and a decisive break above the 89-day moving average for the first time this year. Natural gas pulled back in August-September but held fairly strong support on the lower edge of the Ichimoku cloud on the daily charts.

Importantly for the first time in 2023, natural gas staged a higher low. Last week’s rise has sealed the higher-high-higher-low sequence in the interim. 30-month moving average, coinciding with the 200-month moving average, around the psychological 4.00 mark.

Subsequent resistance is at 4.20 (the 38.2% retracement of the November 2022-February 2023 fall, followed by the October 2022 low of 4.75. On the downside, a fall below the August low of 2.40 would negate the bullish view. Immediate support is at 3.03.

Natural gas monthly chart

 

original-size.webpSource: TradingView

 

 

 

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