Natural Gas Futures Remains Under Pressure

The U.S. Energy Information Administration (EIA) said the storage of natural gas increased by 65 billion cubic feet to 3,077 billion cubic feet for the week ended June 26. The total working gas storage increased by 30.1% from last year....

Energy 15

The U.S. Energy Information Administration (EIA) said the storage of natural gas increased by 65 billion cubic feet to 3,077 billion cubic feet for the week ended June 26. The total working gas storage increased by 30.1% from last year.


Source: Trading Economic

In the above chart, the natural gas storage storage is increasing after April. In fact, there would be a seasonal cycle to build the stockpile during April to November. Therefore, it would expect the continuation of increasing the natural gas storage.

The International Energy Agency estimated that the global consumption of natural gas would drop by 4% this year, or twice amount lost after the 2008 global financial crisis.

From a technical point of view, natural gas futures broke below the March low at $1.52 before posting a strong rebound from $1.43 on a daily chart.

Currently, the prices remain capped by a declining trend line drawn from December 2019 and falling 50-day moving average. Both technical configuration would favour the bearish outlook.

However, investors should alert that the bullish divergence signal from RSI is forming. It would indicate the loss of downward momentum for the prices.


Therefore, as long as the previous high at $1.89 is not surpassed, natural gas could consider a limited downside to $1.52 (the low of March) and $1.43 (the low of June).


In an alternative scenario, a break above $1.89 would signal a bullish breakout of the declining trend and would call for a rebound to $2.16 (the high of May).


Source: GAIN Capital, TradingView

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.