Oversold factor supports natural gas buying scenario with target of 4.520

US natural gas prices are declining moderately on Thursday, with the asset trading below $4.00 per million British thermal units (MMBtu). The decline was caused by the resumption of work of Freeport LNG’s export facility in Texas. It was temporarily shut down on Monday after a lightning strike. 

Its work resumption will increase the gas flow to LNG export terminals. In March, its volume averaged 15.7 billion cubic feet per day, surpassing February’s record of 15.6 billion. Additionally, the export is expected to rise on the launch of Venture Global’s Plaquemines LNG plant in Louisiana, which is to add another 3.2 billion cubic feet per day.

Meanwhile, the temperatures across the continental US are forecasted to be abnormally high through April 9. Such weather conditions can reduce demand for natural gas and result in the increase of its reserves.

At the same time, a survey conducted by the Federal Reserve (Fed) Bank of Dallas says that activity in the US oil and gas industry rose slightly in the first quarter, but the US energy executives grew more pessimistic about the sector’s outlook due to the Donald Trump administration’s tariffs and trade policy.

Duties on steel and aluminum imports imposed on March 12 have already made drilling wells more expensive. According to the survey, oil and gas development costs have risen by 4%. The survey participants note that it may lead to a reduced production of energy.

From the technical point of view, natural gas quotes remain within the uptrend on the daily chart (D1). However, on the H4 timeframe, the slowing correction is signaling market uncertainty. This could either slow down the current decline or trigger an upward price reversal. The Stochastic oscillator (standard parameters) is approaching the oversold zone, which can indicate the upcoming price growth. 

Signal:

The short-term outlook for natural gas suggests buying. 

The target is at the level of 4.520.

Part of the profit should be taken near the level of 4.200.

A stop-loss could be placed at the level of 3.300.

The bullish scenario is short-term, so a trading volume should not exceed 2% of your balance.