Weather broadcasts and storage builds continue to influence the natural gas market, keeping futures stable amidst various factors at play. Energy traders are closely monitoring the potential impact of hot weather on gas consumption, particularly in Texas, where a significant portion of power generation relies on gas-fired plants. Recent storms and power outages in Texas have added to the challenges faced by utilities. However, the market remains optimistic as hot weather is forecasted for the Lower 48 states in the coming weeks, leading to an expected rise in gas demand. Maintenance activities on major U.S. LNG export plants have resulted in lower gas flows.
Despite the storage build, total gas inventories in the United States remain significantly higher than the previous year, reflecting a 26.5% increase at 2.729 trillion cubic feet (tcf). This level is also 15.3% higher than the five-year average. The combination of anticipated demand and increased inventories contributes to the mixed performance of natural gas futures in the market.
Rising Demand and Increased Inventories Contribute to the Mixed Performance of Natural Gas Futures
From the standpoint of technical analysis, the current market sentiment for natural gas is optimistic. The price has surpassed the previous closing value, demonstrating strength, and it remains positioned above both the 200-4H and 50-4H moving averages. The 14-4H Relative Strength Index (RSI) suggests a balanced sentiment. The main support area is identified between 2.333 and 2.285, while the main resistance area ranges from 2.681 to 2.717. As the price approaches the upper end of the main resistance area, the market exhibits a bullish bias. However, the absence of detailed information on minor support and resistance levels limits a more precise analysis.
In summary, the natural gas market remains stable amidst bullish weather forecasts, a storage build, and maintenance activities impacting gas flows. Anticipated hot weather and rising cooling demand contribute to an optimistic outlook, despite higher inventories compared to previous years. Technical analysis indicates a bullish sentiment, with the market exhibiting strength and potential price trends favoring the upside.