Looking to the Futures
Natural Gas Approaches Resistance as Inventories Rise
Negotiations with Panama’s Commerce Ministry and disruptions in Peru send copper have jolted copper prices above their consolidation of the previous month.
Happy Independence Day traders! Henry Hub August Natural Gas, NGQ23, started Wednesday's trading positively after closing lower on Monday due to a cooler US weather forecast. NGQ23, on Monday, settled at $2.709 per MMBtu, down $0.089 per MMBtu.
Natural Gas is heavily influenced by changes in temperature and weather forecasts which can lead to volatile trading sessions. The National Oceanic and Atmospheric Administration (NOAA) released their summer outlook back in June. They are predicting seasonal temperature outlook to be mostly above normal across the US. Seasonal precipitation outlook is predicted to be above normal for the mid-west but normal for most of the US. However, next week's forecast is predicting lower temperatures across the US driven by rain. These lower temperatures lead to a decrease in energy usage to cool off homes and businesses, some people may even open windows.
The US Energy Information Administration (EIA) released its weekly storage report showing a rise of 76 billion cubic feet (Bcf) week over week to 2,805 Bcf as of Friday June 23rd. Inventories were also up 566 Bcf from this time last year a 25.3% increase and up 358 Bcf from the 5-year average, a 14.6% increase. An increase of inventories is usually seen as bearish, but it was forecasted to be an inventory rise of 83 Bcf, thus it was taken as bullish.
On Monday, NGQ23 settled at $2.709 per MMBtu, down $0.089 per MMBtu. On the continuation chart NG is trading above the 50-day simple moving average of $2.395 but well below the 200-day simple moving average of $3.956.
The 14-day RSI is at 59.07% and in an uptrend. The RSI was approaching the 70% over-bought threshold but retreated, indicating possible resistance near that those price points.
The Directional Movement Index (DMI) gives a similar story. The Average Directional Index (ADX, white) is trending up which indicates are strength to the higher directional index. The Positive Directional Index (+DI, green) has retreated but currently trending sideways, however, it is well above the Negative Directional Index (-DI, red). The -DI is low on the DMI study and trending downwards indicating a lower chance for downward price action. Overall, the +DI is unsure of direction due to price resistance but fundamental new will likely drive a break or hold of the resistance seen.
Our Partners at Hightower indicate support at $2.564 and $2.687 with resistance at $2.881 and $2.951.
August 2023 Natural Gas Futures (NGQ23)
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