Market update: bullish natural gas

Natural gas could be set for a material rebound: it rose to an eight-month high last week on higher heating demand, smaller-than-expected inventory build, and rising exports.

Natural gas rose 14% last week, the biggest weekly percentage increase since mid-June. LSEG forecast US gas demand, including exports, would rise in the coming two weeks. On technical charts, natural gas’ break above crucial resistance at the March & August highs of 3.03 has triggered a significant break out from an eight-month-long sideway range.

Natural gas daily chart

Natural gas technical analysis

The price objective of the pattern points to a rise to around 4.00-4.10 in the coming weeks. Last week's jump was also associated with a rise above the 200-day moving average and a decisive break above the 89-day moving average for the first time this year. Natural gas pulled back in August-September but held fairly strong support on the lower edge of the Ichimoku cloud on the daily charts.

Importantly for the first time in 2023, natural gas staged a higher low. Last week’s rise has sealed the higher-high-higher-low sequence in the interim. 30-month moving average, coinciding with the 200-month moving average, around the psychological 4.00 mark.

Subsequent resistance is at 4.20 (the 38.2% retracement of the November 2022-February 2023 fall, followed by the October 2022 low of 4.75. On the downside, a fall below the August low of 2.40 would negate the bullish view. Immediate support is at 3.03.

Natural gas monthly chart

_{This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.}