Natural Gas Spot Prices (NATURAL GAS CFDS) rose during recent trading to intraday levels, to make fresh daily gains up to the time of this writing, of 5.36%. It settled at a price of $4.483 per million British thermal units, after rising in yesterday’s session and second session respectively by 4.16%.
Natural gas futures rallied on Monday as a major weather pattern added much of the demand to the late February forecast. The March Nymex gas futures contract settled at $4,160, up 25.4 cents from Friday’s close, and the April contract jumped 22.5 cents.
Spot gas prices were also boosted by NGI’s Spot Gas National Avg as freezing temperatures continued to boost demand for heating in the eastern US, jumping 1,040 cents to 5,670 $.
Meanwhile, NatGasWeather said the European weather model was getting 17 degrees Fahrenheit daily for the 15-day forecast, keeping the air cool in the last week of February. However, in subsequent runs, the Global Forecasting System (GFS) maintained a “fairly warm and bearish” forecast for the February 21-28 period.
It looks like the mere possibility of the cold weather continuing into March has caused some tension in the market ahead of the next US inventory report, which could show another significant drop in stocks. The Energy Information Administration (EIA) is due to release its next weekly storage report on Thursday. Although a drawdown of more than another 200 billion cubic feet is unlikely, a drawdown will certainly exceed historical levels.
Technically, the rise of natural gas is the result of its earlier adoption of a large medium-term ascending trendline. This coincided with its reliance on its simple moving average support for the previous 50 days as shown in the attached chart for one (daily) period. The positive momentum that helped it lift to settle above the important 4.214 support level.
The attached chart also shows the beginning of the formation of what is known as a positive divergence with relative strength indicators, after hitting oversold areas. This occurred in an exaggerated fashion relative to the price movement, and the emergence of a positive crossover from it, to increase the positive momentum on the upcoming gas trades.
Therefore, as long as natural gas is steady above the 4.214 support level, we expect it to rise further in its next trade, to target the early resistance levels at 4.954.