Natural gas appears to be rangebound, finding support around $3.700 and resistance near $4.000. Price is making its way back to the range support once more.

A bounce could take natural gas back up to the range resistance, especially since the 100 SMA is above the 200 SMA to indicate that support is more likely to hold than to break. However, price has dipped below both moving averages, so these could hold as dynamic resistance moving forward.

Stronger selling pressure might spur a break below support and a selloff that’s the same height as the chart formation. RSI has some room to head south before reflecting oversold conditions, so bearish pressure could be in play until then.

Stochastic already reached the oversold region to reflect exhaustion among sellers, and the oscillator is turning higher to signal a return in bullish pressure.

Natural gas could find a bit of support, as weather agencies are predicting slightly cooler temperatures than previously anticipated. This could mean stronger demand for heating commodities in the coming weeks, especially with winter season officially starting.

The latest inventory report from the Department of Energy revealed a slightly larger draw of 88 Bcf versus the expected reduction of 85 Bcf. This is also larger than the previous draw of 59 Bcf, reflecting a pickup in demand.

Note that supply remains limited in other parts of the world, such as Europe, while demand is starting to rise as temperatures drop. Exports of LNG could also deplete domestic inventories for the time being, although producers are ramping up output in anticipation of more purchases towards the end of the year.

Risk appetite remains shaky, as some central banks are leaning towards hiking borrowing costs in order to combat rising inflation. The BOE already surprised with a rate hike to 0.25% while the Fed signaled scope for three increases next year, likely keeping a lid on price gains and business activity then.