Natural gas (NG) remains under pressure, despite persistently hot weather in some parts of the United States. Over the past week, prices have slid to two-month lows, weighed down by a shift in traders’ focus from a short-term boost in demand to the burning supply glut issue.
Currently, the NG market’s key pillar of support is an abnormal heat wave in Texas and some other southern states. High temperatures drive up electricity demand for air conditioning, which, in turn, increases the consumption of natural gas by power plants. Nevertheless, this is not enough to reverse the dominant trend. Active production, full underground storage, and significantly lower LNG terminal export supplies compared to spring peaks—all hang like a burden over prices. According to Reuters, US NG output for July is expected to climb slightly above 110 billion cubic feet per day, while deliveries to these export plants are likely to remain below April’s highs. Moreover, the Energy Information Administration (EIA) has recently reported an increase in gas inventories by 41 billion cubic feet. This reading was close to market projections, as investors appear convinced that no deficit is on the horizon.
On the technical side, quotes continue to trade below the key resistance near $3.00—a critical barrier to any upside. Bears will remain firmly in control as long as prices stay beneath this threshold. The next downside target could be the local low of $2.50.
The final recommendation:
— Sell natural gas at the current price of $2.85, aiming for $2.50 within one month.
— Place Stop Loss at $3.35 for better risk management if the market moves against us.
This content is for informational purposes only and is not intended to be investing advice.
