Natural Gas Pulls Back As Traders Take Profits After The Recent Rally

Key Insights

• Traders decided to take some profits off the table after the recent rally.
• The recent EIA report served as an additional negative catalyst for natural gas markets.  
• In case natural gas settles below the support at $7.20, it will move towards the next support level at $6.90.

Natural Gas Retreats Amid Profit-Taking

Natural gas is losing ground as traders take profits after the recent rally, which was driven by fears of the U.S. rail strike.

The recent EIA Weekly Natural Gas Storage Report indicated that working gas in storage declined by 80 Bcf from the previous week. Analysts expected that it would decrease by 87 Bcf. Currently, total working gas is within the five-year historical range.

The weather forecast is not favorable for high natural gas consumption, but the market will likely stay focused on the potential rail strike, which may disrupt coal shipments and boost demand for natural gas.

Traders will also keep an eye on the fate of the Freeport LNG restart. Previously, Freeport LNG was expected to restart operations in late November. However, the restart was postponed to mid-December. The restart of Freeport LNG will be bullish for the U.S. natural gas markets.

Natural Gas Tests Support At $7.20

Currently, natural gas is trying to settle below the support level at $7.20. In case this attempt is successful, natural gas will move towards the next support, which is located at $6.90. A move below $6.90 will open the way to the test of the support at $6.75. If natural gas manages to settle below $6.75, it will head towards the next support level at $6.40.

On the upside, natural gas needs to settle back above $7.20 to have a chance to gain upside momentum in the near term. The next resistance level for natural gas is located near the recent highs at $7.55. If natural gas manages to settle above this level, it will move towards the resistance at $7.80. A successful test of the resistance at $7.80 will open the way to the test of the next resistance level at $8.10.

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