Natural Gas Breaks Above Chart Resistance on Colder US Outlook
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Natural Gas Prices, Temperature Outlook, Technical Chart Outlook– Talking Points
- Natural gas prices break higher on US temperature outlook
- EIA storage levels return closer to five-year historical average
- Trendline resistance from 2020 high may turn into support
Natural gas prices are trading higher this week as colder than average weather across the southwestern United States appears likely, according to the latest 8-14 day temperature outlook from the National Weather Service Climate Prediction Center. Florida is also slated for colder than average temperatures, while Alaska and the northernmost portion of the continental U.S. are expected to warm up.
NOAA 8-14 Day Outlook Temperature Probability
The most recent EIA Weekly Natural Gas Storage Report saw a decrease of 122 BcF, bringing the surplus over the five-year average down to 243 Bcf. While inventory remains elevated, the most recent storage draw is seeing levels accelerate lower towards its five-year average (chart below). The next EIA inventory report crosses the wires on December 23 according to the DailyFX Economic Calendar.
EIA NATURAL GAS UNDERGROUND STORAGE
The technical outlook for natural gas appears bullish, with trendline resistance recently giving way to upside movement. Bulls will have to keep prices steady at current levels with little downside to spare before testing the potential support trendline. The MACD is currently trending higher, but bulls are aiming for confirmation with a cross over the zero line.
Natural gas has managed to gain some momentum with a near 15% move from the monthly swing lows; even so, prices are still far off the 2020 high of 3.396. The path forward for natural gas looks far from certain, but longer-term momentum looks bullish with the 100- and 200-day Simple Moving Averages drifting higher. Still, RSI is neutral and a break back under the trendline may have natural gas prices aiming for December lows in the last weeks of 2020.
Daily Natural Gas Chart (NYMEX)
Chart created with TradingView
Natural GAS TRADING RESOURCES
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--- Written by Thomas Westwater, Analyst for DailyFX.com
To contact Thomas, use the comments section below or @ FxWestwater on Twitter
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.