Natural gas prices have moved lower in today’s trading, falling to a new low for the week at the $3.08/MMbtu level. The contract for May delivery on the New York Mercantile Exchange is currently modestly above the low of the session, trading at $3.10, a loss of nearly 2% on the day.
The contract is moving lower despite the current oversold condition, a sign of underlying weakness that suggests prices have more room to go on the downside in next week’s trading.
Further downside price action is also suggested by the recent failure against the upward sloping trendline which had defined price action since the late February low was established.
With today’s move to the downside, the next level to watch as support going forward is at the March 23rd low at $3.056, which represents a test of the mid-point of March 20’s long green candle, which comes in near $3.05.
On the upside, initial resistance is near the $3.12 level, representing the low established in April 4th. The next area of resistance is at $3.22, followed by the rising trendline shown on the daily chart. At present, a break above this level is not expected and further downside appears likely in next week’s trading.
According to natgasweather.com, numerous weather systems will impact the US this weekend through early next week with areas of showers and cooling, but none exceptionally cold with highs mainly in the 40’s and 50’s north to 60’s to 80’s south. The net result will be to drive slightly stronger than normal natural gas demand through Tuesday. However, during the middle of next week, warm high pressure will dominate much of the country besides the west-central US to drop national natural gas demand back below normal.