With a fourth consecutive week of closing up, natural gas is looking strong. However, for the bulls in the trade, prices have remained stagnant in the lower $2 level, scarcely moving the needle. On Friday, the front-month gas contract traded on the Henry Hub of the New York Mercantile Exchange settled at $2.266 per metric million British thermal units. That was 6% greater than a week ago and 3.5% higher than the day. On Friday, the front-month gas contract traded on the Henry Hub of the New York Mercantile Exchange settled at $2.266 per metric million British thermal units.
That was 6% greater than a week ago and 3.5% higher than the day. The gains follow a selloff that was particularly sharp last week, selling off by more than 11%, leaving the market up by a net 11% over the previous five weeks. Because of the mild weather and limited demand for cooling or heating, gas futures have been stuck at mid-$2 or lower since mid-March. Gasoline has been produced in large quantities, which has progressively added to the surplus in the supply of petrol. 2.141 trillion cubic feet, or tcf, of gas, was kept underground in the United States as of last week.
That was 18.4% more than the five-year average of 1.809 tcf and 31.2% more than the level from the previous year of 1.632 tcf. Henry Hub’s front-month is down more than 50% year over year since the end of the previous year, despite the relative stability of the $2 price. According to Sunil Kumar Dixit, chief technical strategist at SKCharting.com, the fortunes of gas bulls are not expected to shift much very soon based on the charts.
“A daily and weekly close above $2.40 will be initial signs of a resumption of the uptrend in Henry Hub’s front-month, to be affirmed by a clearing through of the swing high of $2.55,” Dixit stated. Beyond that, he added, is the longer-term objective of the 100-day Simple Moving Average. On the other hand, a consistent decline below the 5-day EMA of $2.19, or EMA, will maintain the bearish momentum. Potential decreases to $2.04 and $1.94 could result from it.