Natural Gas News: Near-Term Direction Hinges on Reaction to 50-Day and 200-Day Averages

By:

James Hyerczyk

Published: Nov 29, 2024, 18:15 GMT+00:00

Key Points:

Natural gas futures hover near $3.399, with $3.444 as key resistance; Monday’s gap risk keeps traders on edge.
EIA reports a 2 Bcf withdrawal, below expectations, leaving inventories 7.2% above the five-year average.
Cold Midwest weather drives heating demand, but mild conditions in the South and Northeast limit consumption.
Technical analysis highlights key levels: $3.444 resistance and $3.118 support as volatility builds.

Natural Gas Futures Edge Higher in Post-Holiday Trading

Daily Natural Gas

Natural gas futures advanced on Friday in light post-holiday trading, with investors positioning for potential bullish developments over the weekend. Prices stayed below key technical levels, including the 200-day moving average at $3.399 and a pivotal resistance at $3.444. A breakout above this level could accelerate gains, with targets in the $3.637-$3.647 range. On the downside, support resides at the 50-day moving average at $3.149 and a critical zone between $3.118 and $2.993. Recent price action signals heightened volatility, increasing the possibility of a significant gap opening on Monday.

Storage Report Reflects Supply Surplus

The U.S. Energy Information Administration (EIA) reported a modest 2 Bcf withdrawal from natural gas inventories for the week ending November 22. This fell short of market expectations for a 3 Bcf draw and significantly lagged the five-year average draw of 30 Bcf for this period. As a result, natural gas inventories remain 7.2% above their five-year seasonal average, highlighting ample supply levels. This bearish storage data weighed on prices during Wednesday’s session, adding pressure to the market.

Weather Patterns Show Mixed Demand Signals

Cold air continues to drive heating demand in the Midwest, with temperatures ranging from the 10s to 30s Fahrenheit. However, milder conditions in the Northeast and southern U.S. are tempering overall demand. NatGasWeather projects heightened heating needs through the weekend as colder air pushes southward, but a potential return to milder conditions in early December could limit consumption, creating a less supportive backdrop for prices.

Stable Production and LNG Exports

Lower-48 dry gas production was reported at 103.4 Bcf/day, marking a 1.5% year-on-year decline. LNG exports held steady at 13.1 Bcf/day, down 0.8% week-on-week. U.S. electricity generation for the week ending November 23 increased 3.86% year-on-year, reflecting steady demand from utility providers despite seasonal fluctuations.

Market Forecast

Natural gas prices face heightened volatility heading into next week, with the potential for a significant gap in either direction at Monday’s open. While mild weather forecasts for early December and bearish storage data apply downward pressure, technical levels near $3.444 offer a key resistance point for upside momentum. A breach above this level could signal a rally, while support at $3.149 to $3.118 may provide a floor if prices decline. Updated weather models and post-holiday trading activity will play a crucial role in shaping price direction.

More Information in our Economic Calendar.

About the Author

James Hyerczykauthor

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.