Natural Gas Prices Surge Amidst Favorable Market Conditions

Bullish momentum propels natural gas prices, marking significant gains due to increased demand and reduced inventory.

Natural gas prices surged 14% last week, marking the most significant weekly gain since mid-June. Key factors contributing to this surge include cooler weather, a more petite inventory build, and increased exports. The recent momentum suggests a potential substantial rebound for natural gas, reaching an eight-month high due to higher heating demand, a lower-than-expected inventory build, and escalating exports.

Natural Gas Prices Reach Eight-Month Highs

Last week’s 14% increase in natural gas prices was notable, driven by rising US gas demand, including exports, predicted to continue over the next two weeks. Analyzing, natural gas broke above a critical resistance level at 3.03, representing the March and August highs, triggering a significant breakout from an eight-month sideways pattern.

The pattern indicates a potential rise to approximately 4.00-4.10 in the upcoming weeks. Last week’s surge saw natural gas prices breach the 200-day moving average and decisively surpass the 89-day moving average for the first time this year. Although natural gas experienced a pullback in August-September, it found substantial support at the lower edge of the Ichimoku cloud.

Noteworthy is that natural gas established a higher low for the first time in 2023, solidifying a higher-high-higher-low sequence in the interim. The 30-month moving average, coinciding with the 200-month moving average, hovers around the psychological 4.00 mark. Subsequent resistance levels lie at 4.20 (the 38.2% retracement of the November 2022-February 2023 decline), followed by the October 2022 low of 4.75. However, a drop below the August low of 2.40 would invalidate the bullish outlook. Immediate support stands at 3.03.

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