Natural gas broke through a key support level around the $2.650 mark, signaling room for further declines until the next major floor. Looking at the weekly time frame shows that this bearish target is around $1.685.
The 100 SMA is above the longer-term 200 SMA to indicate that the path of least resistance is to the upside. This suggests that support is more likely to break than to hold. However price has already broken below both moving averages to reflect the presence of selling pressure and hint at a possible bearish crossover.
RSI is still heading lower to signal that there is some bearish energy left, possibly enough to drag natural gas down to the next long-term bottom. However, this oscillator is also nearing the oversold region to signal exhaustion. Turning back up could mean a return in bullish momentum and a bounce.
Stochastic is already in the oversold region to show that sellers are already tired and willing to let buyers take over. Then again, this might result in a mere pullback to the broken support or the dynamic resistance at the moving averages.
Natural gas has been breaking one support area after another now that warmer weather conditions are setting in across the US. Although a few forecasts are still hinting at colder than usual temperatures, these might not be enough to drive up demand for heating commodities like natural gas.
Also, the US push to pursue dominance in the energy sector might also be reviving oversupply concerns. In other parts of the globe, the Middle East also seems keen on tapping into the natural gas export market, which could lead to elevated world supply and further downside pressure on price.
Besides, weaker global growth forecasts would likely mean weak business optimism and therefore lower demand.