Selling natural gas with target of 3.335 amid colder weather and oversupply

Natural gas (NG) prices kept falling on Thursday morning, hitting 3.559. Earlier, they were up as traders got ready for record heat in the US Northeast region this week, which temporarily boosted demand for electricity. But now the main reasons for the decline are increased production, higher inventories, and lower geopolitical risks after Israel and Iran called a truce.

Oversupply was the key factor putting pressure on gas prices. US production reached a record 105.5 billion cubic feet per day in June, exceeding demand (79.9 billion cubic feet). Gas storage inventories are already 6% above the seasonal average, with liquefied natural gas (LNG) exports falling to 14.1 billion cubic feet per day due to maintenance.

Climate factors also play a role. Despite record heat in June, which pushed electricity consumption to the highest level since August 2024, long-term forecasts predict colder weather in the United States as early as next week, with temperatures dropping to normal levels for this time of year. This will reduce gas demand for cooling.

Geopolitical stability in the Persian Gulf also affected market sentiment. De-escalation in the Middle East reduced risks of supply disruptions in the Strait of Hormuz, which accounts for 20% of global LNG shipments. Previous concerns had supported fuel prices, but now the market is adjusting these expectations.

The daily chart shows the price falling after a bearish reversal that occurred on June 19. Currently, the EMA(20) is below the EMA(50), confirming the existing trend. However, if the price begins to break above the EMA(20), it could signal a bullish rebound. The Stochastic Oscillator is near the oversold zone, suggesting that the price may soon rise. However, it is unlikely that this rise will be lengthy or significant. Most likely, the summer high has already been reached.

Current recommendation

Selling at the current price. Take profit — 3.335, Stop loss — 3.782.