Natural Gas Futures Further upside expected

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By :  ,  Financial Analyst

Natural Gas Futures (Short Term): Further upside expected

The natural gas futures prices were up 5% yesterday, the highest level since November as the initial impact from storm Laura was not as bad as feared. According to the government, 60% of natural gas output has shut down in the Gulf of Mexico.

The U.S. Energy Information Administration reported that the natural gas inventories increased 47.0 Bcf, higher than the expectation of 45.0 Bcf, for the week ended August 21. In the below chart, it suggests that the seasonal cycle of natural gas inventories remains up.

Source: Trading Economic

From a technical point of view, natural gas futures prices rebounded from June's low and broke above the declining trend line drawn from November 2019. 

Currently, the prices are trading above the rising 20-day moving average, while the relative strength index is above its overbought level at 70. Both indicators suggest the upward momentum for the prices.

The bullish readers could set the nearest support level at $2.275, while the resistance levels would be located at $2.918 and $3.25 respectively.

Source: GAIN Capital, TradingView
Related tags: Commodities

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