Natural gas futures have started the week on a positive note, with prices rising 2.5% as long positions return to the market after a wave of selling. This upward move can be attributed to the overall strength in the oil markets. However, despite the increase, natural gas prices are still down more than 2% since the beginning of the month.
Although the United States is entering its heating demand season, which typically leads to an increase in energy demand and a depletion of reserves, next month may offer a period of lower volatility due to transitional weather conditions. Additionally, speculators are repositioning according to the Trader Commitments report, with short and long contracts experiencing a decline.
One source of volatility in the natural gas market is the strike at two Chevron plants in Western Australia. This strike is expected to escalate, potentially affecting departures from Australia and causing increased competition for liquid natural gas cargo. Another issue arose at an LNG facility in Texas, where there was a significant drop in feedgas deliveries. Although the issue has been resolved, it may have contributed to price weakness later in the week.
Looking ahead, US inventory numbers will influence price action, and traders will continue to monitor any further developments regarding Chevron workers’ industrial actions in Australia. From a technical point of view, prices are rising above the 100-day moving average, which could signal the beginning of a possible uptrend.
Source: Thomas Westwater, writer and financial analyst at tastylive
– Natural gas: a fossil fuel composed mainly of methane, used as an energy source for heating, cooking and electricity generation.
– Volatility: fluctuations in price or value, often used to measure the degree of risk in a financial market.
– LNG: Liquefied Natural Gas, which is natural gas converted into a liquid state to facilitate its storage and transportation.
– Moving Average: A calculation used to analyze data points over a specific period of time to identify trends and patterns.
– Commitments of Traders Report (COT): a report published by the Commodity Futures Trading Commission (CFTC) that provides information on the positions taken by speculators in various commodities.
– SMA: Simple Moving Average, a commonly used technical indicator that calculates the average price over a specified time period.
– MACD: Moving Average Convergence and Divergence, a trend-following momentum indicator that shows the relationship between two moving averages of a security’s price.