Gas prices fall amid warm weather forecasts

Natural gas prices continue the decline that began this week. Since Monday, prices have fallen by 10.45%, and on Thursday the opening price amounted to $4.043. 

This decline came after prices reached two-year highs at the beginning of the week. The main reason for the decline was the market participants' expectations of lower demand due to the projected warming in the US in March. Maxar Technologies reported that temperatures between March 17 and 21 will be well above normal in the Midwest and eastern part of the country, which could significantly reduce the use of natural gas for heating.

However, prices get some support from inventory data. As of March 9, gas storage facilities in Europe were only 36.5% full, well below their 5-year average. This shortage creates some tension in the market, as European countries remain one of the key consumers of liquefied natural gas (LNG). At the same time, according to the Energy Information Administration (EIA), as of February 28, US natural gas inventories were 11.3% below their 5-year average and near the most limited levels in 2.5 years.

However, warmer seasonal temperatures may contribute to the early replenishment of storage facilities, which also puts pressure on prices. In addition, Canada's decision not to impose tariffs on electricity exports to the United States had an impact on the price decline.

Technical analysis shows the continuation of the decline. MACD indicator shows a bearish sentiment in the market. The main line crossed the signal line from top to bottom, which is usually interpreted as a signal to the beginning of the downtrend.

As of March 13, according to the stochastic oscillator, the market is close to oversold condition. The blue line is below the red line, which indicates a possible continuation of the decline, but oversold condition may provoke a temporary rebound.

Current recommendation:

Sell Natural gas at the current price. Take profit – 3,550. Stop loss – 4,290.