Cooling demand and supply disruptions support the idea of buying natural gas to the 2.420 level

Natural gas prices traded in a narrow range as market participants assessed cooling demand growth at the end of August and possible supply disruptions amid expectations of lower demand in Western countries in the fall.

A surplus of gas in U.S. storage offset optimistic news of lower production and a forecast of hotter weather over the next two weeks. With warm weather coming next week, more energy will be needed to run power plants to keep air conditioners running.

Meanwhile, natural gas inventories in Europe are near record levels. That's helping to keep prices from rising on fears of supply disruptions. According to Gas Infrastructure Europe, EU natural gas storage facilities were at 90% of their full capacity as of August 19. That figure is two months ahead of the EU's November 1 target.

Earlier this month, fears of reduced imports from Russia drove up prices. While the pace of restocking has slowed, current levels are still above the five-year average. Nevertheless, Europe remains at risk of sudden disruptions. Norway, the region's main gas supplier, will soon begin major maintenance work. This could be an additional catalyst for rising natural gas prices.

In terms of technical analysis, natural gas prices are recovering from a 2.5 month downtrend. The convergence of the Relative Strength Index (RSI) on the H6 chart indicates a potential increase in energy costs and a possible formation of a new uptrend.

Signal:

Short-term prospects for natural gas suggest buying. 

The target is at the level of 2.420.

Part of the profit should be taken near the level of 2.290.

A stop-loss could be placed at the level of 2.000.

The bullish trend is short-term, so trade volume should not exceed 2% of your balance.