Selling natural gas with target of 3,300 amid lower demand due to mild weather

Natural gas prices in the US have shown a decline in recent days, falling to a one-week low. The downward pressure stems from reduced demand due to seasonal maintenance at LNG export plants, including Cameron LNG and Cheniere Energy, as well as mild weather conditions in North America that limit the use of heating and cooling systems. Thursday's opening price was 3,456.

The weather forecast remains a key driver of price movement. Despite hotter weather in Texas that could encourage air conditioning use, analysts expect overall gas demand to remain low in the coming weeks. Mild weather elsewhere is allowing utilities to inject significant volumes into storage. Meanwhile, storage levels are already 3% above the five-year average, adding pressure to prices.

Prices are marginally supported by falling gas production. According to LSEG, average production fell from a record 105.8 billion cubic feet per day in April to 103.7 billion cubic feet per day in May. However, this drop was partially offset by revisions to preliminary data, indicating relative supply stability.

The international market situation remains mixed. Rising gas prices in Europe are partially offset by weak demand in Asia. At the same time, the European market continues to reduce its dependence on Russian gas, which creates additional opportunities for American exporters.

In addition, US oil production is forecast to decline in 2025, which could reduce associated gas output. While this may lend theoretical support to prices in the future, the impact has been negligible so far.

The technical picture indicates a downtrend. The daily chart shows that the EMA(20) is below the EMA(50), confirming the pressure on prices. RSI on May 12 rebounded to 66, which could allow the downward trend to resume without a major correction.

Current recommendation:

For the short term, consider selling at current levels. Take-profit could be set at 3,300. Set a stop loss at 3,530.