Natural gas prices in the U.S. broke through the round $2,000 level. However, this was followed by a quick buyback and the price failed to consolidate below the level. There are no negative fundamentals, so the continuation of the rebound from the important support level should be expected in the near future.
The U.S. labor market continues to weaken slowly. A weakening of the labor market means a potential easing of the Fed's monetary policy. Such a result would be positive for all commodities.
Drilling activity in the U.S. is declining not only in oil, but also in natural gas.
According to Baker Hughes information, the total number of active rigs in the U.S. last week decreased by 4 units to 751. This figure was 62 units below the 2022 level.
Decline in reserves should eventually effect the rise in natural gas prices
The latest weekly drop in gas prices came after the publication of a government report showing that energy stocks in U.S. storage dropped only a bit below predicted levels.
According to an Energy Information Administration (EIA) report, 23 billion cubic feet of gas were withdrawn from gas storage in the week ending March 31. The balance was 1.83 trillion cubic feet.
Stocks in storage are now 32% higher than a year ago and almost 20% higher than the average for the past five years, the EIA reported.
According to the technical analysis, there was no fixation of the price below $2. After that the price consolidated at the same level. At the moment it can be seen that there is an upward exit from the pro-trading. This impulse may be strong, as last week's decline was volatile and there were no fundamental preconditions for a sharp decline.
The upside target for natural gas prices could be the 0.5 Fibonacci level from the entire wave of decline at the end of last week. This level corresponds to a price of $2,083. Stop-loss can be set at the second break of a significant level of $2,000.
Rise in the price for natural gas:
Take profit – 2,083
Stop-loss – 2,000
This content is for informational purposes only and is not intended to be investing advice.