Natural gas futures continued lower in early trading Monday as analysts highlighted bearish technical momentum. Coming off a 56.0-cent sell-off to close out last week’s trading, the October Nymex contract was down another 28.8 cents to $7.476/MMBtu as of around 8:55 a.m. ET.
Friday’s sell-off saw the front month drop below key technical support at $7.75-7.88, setting the stage for potential further declines near term, according to EBW Analytics Group senior analyst Eli Rubin.
“Last week’s price action sets up a bearish technical backdrop for natural gas,” Rubin said. “After initially bouncing off technical support near the 50-day and 100-day moving averages — and pushing above the 20-day moving average on Wednesday — the collapse into the weekend sets up further near-term selling pressure.”
Should support near the $7.50 level fail it could lead to “significant further declines,” the analyst added. Still, last week’s volatility demonstrates that “natural gas remains highly susceptible to any emergent bullish catalysts igniting a rapid spike.”
Looking at weekend forecast trends, the major weather models underwent only small changes, according to NatGasWeather.
“The timing of swings in national demand held, with relatively strong demand this week as unseasonably strong upper high pressure builds over the interior U.S. with highs of upper 80s and 90s, hottest over Texas and the Plains,” NatGasWeather said. “It will also be very warm over portions of the Midwest and up the Mid-Atlantic Coast mid-week with highs in the upper 80s to near 90.”
A system moving over the Great Lakes and Northeast late this week could deliver some early fall heating degree days to support demand, the firm said.
Still, the remained bearish for the period starting this weekend and extending through Oct. 4, with the Midwest and East expected to enjoy “mostly comfortable” conditions during this time frame, according to NatGasWeather.
“Trade this week will be of great interest to see if bears capitalize on newly found momentum to push prices under $7.50 or if bulls find yet another reason to buy the dip,” NatGasWeather said.
Meanwhile, Hurricane Fiona battered Puerto Rico over the weekend, and the center of the storm was expected to remain over the eastern Dominican Republic Monday, according to the National Hurricane Center.
The forecaster’s projected storm track as of early Monday showed the U.S. East Coast remaining clear of Fiona’s path this week.
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September 19, 2022 at 08:18PM
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Bearish Technicals Seen Pressuring Natural Gas Futures as Sell-Off Continues - Natural Gas Intelligence
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