Natural gas prices stabilized on Thursday after falling 7% the previous day. Markets reacted to new data on the state of natural gas supply in the United States. According to the latest report from the Energy Information Administration (EIA), 3 billion cubic feet of gas was taken out of storage for the week ending November 22. This figure is broadly in line with market expectations.
However, the result was well below the average for the past five years, which is typically a reduction of 30 billion cubic feet over the same period. This increased pressure on prices, especially amid forecasts that the upcoming cold front in the US will be less severe than previously anticipated by the end of December.
Despite this, export demand for natural gas remained strong in November due to active preparations in Europe and Asia for the winter heating season.
According to the European Center for Medium-Range Weather Forecasts, temperatures in Europe over the next four months will remain below levels seen over the past two years. A cold winter will increase pressure on already high gas and electricity prices in the EU. This might coincide with the suspension of pipeline gas supplies from Russia on January 1, which traditionally coincides with the coldest period of the year.
Frosty weather and weak wind power generation have already led to a faster-than-usual withdrawal of energy from storage this month. These factors are limiting the fall in gas prices.
At the technical level, natural gas quotes demonstrate the formation of an upward trend on the D1 timeframe. The price, having tested the channel resistance, rolled back to the local trend support. Bulls Power and Bears Power indicators (standard values), remaining in the positive zone, confirm the strength of bullish sentiment.
Signal:
The short-term outlook for natural gas is to buy.
The target is at the level of 3.720.
Part of the profit should be taken near the level of 3.530.
A stop-loss could be placed at the level of 2.820.
The bullish trend is short-term, so a trading volume should not exceed 2% of your balance.
