Natural gas prices fell noticeably amid record production and forecasts for mild weather in the U.S. through late November. Mild climatic conditions are likely to limit heating demand and allow utilities to keep injecting gas into storage for a couple more weeks.
Price fluctuations in March — April have forced some hedge funds out of business. Typically, the March — April spread helps make a winter weather forecast because March is the last month of heating season when utilities pull gas out of storage. A smaller March premium signals a warmer winter weather.
The U.S. Energy Information Administration (EIA) said the release of its weekly gas storage report has been delayed due to a planned system upgrade. According to analysts, utilities pulled about 7 billion cubic feet of gas from storage last week.
Despite recent milder weather conditions, temperatures are still declining with the coming of winter. LSEG forecasts that cooler weather will cause U.S. gas demand in the continental states, including exports, to rise to 108.8 billion cubic feet per day next week.
Meanwhile, gas storage filling rates in Europe continue to grow, approaching 100%.
According to Gas Infrastructure Europe, on November 5, inventories of gas in the European Union and Great Britain reached a record level of 1,146 terawatt-hours (TWh). These indicators exceeded the seasonal average for the previous 10-year period. This was partly due to a rather mild start to the autumn in Northwest Europe.
Weather factors and storage filling have already been factored into the market, so the pressure on natural gas prices may decrease.
Natural gas quotes are in the formation of an upward correction corridor on the D1 timeframe, rolled back from the trend resistance.
The price tests the local support of H2 time interval. Divergence of Relative Strength Index indicator (standard values) increases the possibility of price growth within the upward corridor.
Signal:
Short-term prospects for Natural gas are to buy.
The target at the level of 3.570
Part of the profit should be taken near 3.320
A stop-loss could be set at 2.750
The bullish trend has a short-term character, so the trade volume should not be more than 2% of your balance.
This content is for informational purposes only and is not intended to be investing advice.
