Natural gas is moving sideways on its short-term chart, finding support at the $2.500 mark and resistance at $2.600. Price is approaching the bottom of the range, and technical indicators are giving mixed signals.

For one, the 100 SMA is below the 200 SMA to indicate that the path of least resistance is to the downside. In other words, support is more likely to break than to hold. If that happens, natural gas could slide by the same height as the rectangle pattern, taking it down to $2.400.

Then again, the gap between the indicators is narrowing to reflect weakening bearish pressure and a potential bullish crossover. At the same time, stochastic is indicating oversold conditions or exhaustion among sellers, and turning higher would mean that buyers are returning.

RSI has a bit more room to move south, so natural gas price could follow suit while bearish momentum is in play. This might just be enough to take price down to the bottom of the range before sellers take a break.

Natural gas could draw a boost from the inventory report of the Department of Energy, which is slated to show a draw of 21 Bcf. This would be larger than the earlier reduction of 11 Bcf, reflecting stronger demand for the heating commodity.

A smaller than expected drop or a surprise build might hint that purchases remain weak or that supply is elevated, putting downside pressure on prices. Weather forecasts still predict mild temperatures, though, which could be enough to keep demand for natural gas supported in the coming weeks.

However, risk appetite could be an opposing force as traders are worried about the impact of another surge in COVID-19 cases. This could limit investors’ demand for riskier assets like commodities, as businesses trim investment and spending activity.