March 26, 2023
The weather forecast sent the gas price under 5 US Dollars.
Hot Forex Review
Commodities

The weather forecast sent the gas price under 5 US Dollars.

As always, the leading price changer for every commodity is its demand. While most of the weather forecast was about the wave of cold winter, especially in the first days of 2023, the latest updates show that it is more like a cold wave before the heat than a permanent cold mass. At the same time, the US gas output volume is about 99 bcf per day. Even if it is less than the November peak of around 102 bcf/d, it is still up about 1.5 bcf/d annually, making investors reluctant to support a gas rally. Therefore, production needs to decline significantly to see the gas price again at previously seen levels.

Natural gas is at a 2-month low, but lower prices need more reasons.

On top of that, Wednesday’s EIA report shows that inventories are acceptable, supporting the chart bears. According to the US Energy Information Administration (EIA), for the week ended December 16, Gas inventories across the US drew 87 billion cubic feet, or bcf, compared to market expectations for a draw of 93 bcf.

In the past four weeks, Gas prices have lost about 30%. This is while before this downward in the prices, due to forecasts that all of the United States will be frozen during the Christmas week and the first week of New Year, gas prices have risen about 20%.

From the technical point of view, as shown in the below Daily chart, Natural gas had two essential supports around $6.30 and $5.30; breaching these levels, bears got more strength to continue the trend. $4.50, $4.00, and $3.80 are the following supports. However, seeing the price under $4.50 needs much more reasons and would be challenging. Conversely, a return above 5.30 US dollars can breach the downtrend, while bulls will appear above $6.30.

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