Selling natural gas with target at 2.075 amid weakening demand and high supply volumes

On Thursday, a decline in natural gas prices slowed down after a significant drop the previous day. The main reason for the decrease was the weakening of the cold weather's impact on short-term markets, which had previously supported demand.

Weather forecasts point to persisting mild conditions. This reduces the likelihood of significant demand growth in the near term.

The US National Hurricane Center (NHC) is also monitoring the development of possible cyclones that could affect both supply and demand. However, their impact is estimated to be limited so far.

In addition, the high level of natural gas production in the United States, despite the current weather conditions, continues to put pressure on the market.

At the same time, countries in the European Union have increased their imports of Russian liquefied natural gas (LNG) in recent months. This makes it more likely that imports in 2024 will exceed those in 2023. Russia is the second largest LNG supplier to the EU after the United States.

Gas withdrawals from European underground storage facilities (UGS) in October were the fourth highest for a month in the history of monitoring, while gas injection rates reached their lowest since 2011. Despite inventory levels of more than 95%, they are noticeably lagging behind the 2023 record levels. This provides a support for the gas prices in Europe.

From a technical point of view, the natural gas prices broke out of the uptrend on the H4 timeframe and headed towards the support on the D1 timeframe. Bulls Power and Bears Power indicators (standard values), remaining in the negative zone, are confirming the strength of the bearish sentiment.

Signal:

A short-term outlook for natural gas suggests selling. 

The target is at the level of 2.075.

Part of the profit should be taken around the level of 2.,230.

A stop loss is at the level of 2.570.

The bearish trend is of a short-term nature, so it is worth choosing a trading volume of no more than 2% of the balance.