The price of natural gas reached the upper boundary of its flat channel. The news background for the gas market remains fairly neutral, so the flat movement may be a priority at the moment.
The demand for natural gas remains in doubt. The seasonal factor points to its weakness, but it should be considered that prices for crude materials are at their lowest levels.
According to Energy Ventures Analysis specialists, there is still an oversupply in the market. At the same time, demand for natural gas is often low in April and May due to better weather conditions.
The quick ending of the maintenance period at the fossil fuel companies would serve as a bearish factor for prices. But in the case of longer repair work, the oversupply on the gas market may decrease.
The EIA expects less gas consumption this year as a result of a warm winter and reduced consumption of gas in the residential and commercial sectors.
The agency forecasts production to be relatively flat for the rest of the year. This is due to a decrease in production by companies in response to low prices.
According to the EIA, U.S. electricity consumption in 2023 will be about 1% lower than the previous year. This dynamics is also connected with the warmer weather.
The forecast of a relatively weak demand for gas this year is confirming.
Technical analysis shows that the price of natural gas failed to break the rectangle upward and now it is consolidating near the top of the rectangle. At the same time on the daily timeframe the RSI indicator points to the overbought removal and it is located near the neutral level of 50 points. So technically there is space for a new decline in quotes.
Amid a neutral external background, it is allowed to decrease the natural gas price to the lower boundary of the figure.
The level of $2,08 will be the downside target. Stop-loss can be set at the upward break of the figure and the renewal of the local highs. This corresponds to a price of $2.25.
Natural gas price reduction:
Take profit – 2.08
Stop-loss – 2.25
This content is for informational purposes only and is not intended to be investing advice.
