NATGAS Faces Major Resistance with Middle East Calm

FxNews—U.S. natural gas futures have traded at approximately 2.37 per MMBtu, falling from a recent four-month high of $2.8, the October high. This significant price decrease happened because risk premiums have lowered, and plenty of gas is available domestically.

Additionally, traders are now less concerned about supply issues from the Middle East. Israel struck Iran’s oil facilities, but since Iran hasn’t responded aggressively, worries about major supply disruptions have lessened.

U.S. Gas Production Nears All-Time High in October

Furthermore, reports from Wood Mackenzie indicate that U.S. natural gas production rose to 103 billion cubic feet per day in late October. This is near the highest recorded production levels, meaning the U.S. produces almost as much gas as possible.

The Energy Information Administration reported that natural gas reserves increased by 78 billion cubic feet during the fourth week of October. This large buildup shows a substantial amount of gas in storage.

Reduced Heating Demand Pushes Natural Gas Prices Down

Meanwhile, weather forecasts predict milder temperatures in the continental United States. As a result, people will use less heating that relies on natural gas. This reduced demand for heating further pressures prices to go down.

NATGAS Analysis – 5-November-2024

NATGAS has been experiencing bullish momentum from $2.1 since early November. The uptick momentum eased near the 38.2% Fibonacci retracement level at $2.87. Meanwhile, the Stochastic Oscillator stepped into overbought territory, meaning U.S. Natural Gas is overpriced in the short term.

NATGAS Faces Resistance at 38.2% Fibonacci

That said, the 38.2% Fibonacci is the immediate resistance. From a technical standpoint, a new bearish wave would emerge if the NATGAS price remains below $2.38. In this scenario, the bears would initially target the 23.6% Fibonacci retracement level at $2.28, which is active support.

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NATGAS Bullish Resumption Possible Above $2.38 Level

Conversely, the bearish outlook should be invalidated if NATGAS exceeds $2.38. If this scenario unfolds, the next bullish target could be the %50 Fibonacci retracement level at $2.47.