Natural gas could be in for another test of the resistance on its descending triangle pattern, as price formed lower highs and found support around $3.875.

The 100 SMA is above the 200 SMA for now to suggest that buyers have the upper hand, but the gap between the indicators is narrowing to reflect weakening bullish pressure and a likely bearish crossover. Price is also trading below both moving averages, so these could hold as dynamic resistance. If that’s the case, another dip to the triangle bottom could follow.

Stochastic has a bit of room to climb before reaching the overbought zone to signal buyer exhaustion, so bullish pressure could stay in play for much longer until the resistance around $4.000 is tested.

Natural gas continues to draw support from forecasts of higher temperatures in the coming weeks, as this would keep demand for heating commodities strong. The previous week’s inventory report revealed a smaller build of 36 Bcf in stockpiles versus the estimated 41 Bcf gain, confirming that purchases have been supported.

The upcoming report might show another pickup in demand, although producers might have also ramped up output to meet seasonal factors. A larger than expected build could unwind some of the commodity’s price gains while another smaller increase or a surprise draw could spur more gains.

Risk appetite in relation to the Delta variant spread might also impact commodity price action in general, as more lockdowns could dampen investor sentiment and drag higher-yielding assets lower. On the other hand, indications that vaccination efforts are successful could bring more gains for commodities like natural gas.

Forecasts of even warmer weather up ahead could also spur more gains for natural gas since this would ensure stronger purchases in the coming weeks.