Natural gas seems to be resuming its longer-term uptrend, as price formed a spinning top on its daily time frame. Price also bounced off its rising trend line that’s been holding since March.
The 100 SMA is above the 200 SMA on this time frame to signal that the path of least resistance is to the upside or that support is more likely to hold than to break. In that case, natural gas might still recover to the swing high near $9.000.
However, stochastic is on the move down to reflect the presence of selling pressure, so natural gas might be in for another dip. The oscillator has plenty of room to slide before reflecting exhaustion among bears, so there could be more losses from here.
Similarly RSI is heading south, so price could follow suit while bearish momentum remains in play. The oscillator has a lot of ground to cover before indicating oversold conditions as well.
Natural gas could remain supported, as the European Union moves closer to a full embargo on Russian fuel commodities. This could spur a global supply crunch if production remains limited while demand continues to stay elevated.
However, rising temperatures in parts of the world could keep a lid on demand for heating commodities in the near-term, which might then translate to an excess of natural gas in stockpiles.
Earlier on, the Department of Energy reported a smaller build of 76 Bcf versus the projected increase of 82 Bcf and the earlier build of 77 Bcf. This suggests that purchases remain supported and could enjoy another boost once summer season and higher temperatures kick in.
Risk sentiment is still keeping rallies in check, though, as worries about a possible recession in China are dragging investors away from riskier assets like commodities.