Natural gas could be in for a pullback from the broken rising trend line to gather more selling energy for its reversal. The Fibonacci retracement tool shows more areas where sellers could be waiting.

The 38.2% level is at $2.981 then the 50% level is at $3.009. A larger correction could reach the 61.8% Fib at $3.037. If any of these levels are able to keep gains in check, natural gas could fall back to the swing low at $2.889 or lower.

However, the 100 SMA is holding as dynamic support at the moment and is above the 200 SMA to indicate that the path of least resistance is to the upside. In other words, there’s still a chance that the uptrend could resume.

Stochastic is also on the way up to confirm that buyers are in control. The oscillator has room to climb before reflecting overbought conditions or exhaustion among buyers. RSI is also pulling higher without reaching the oversold area, suggesting that buyers are eager to take over.

Natural gas saw a larger than expected build of 71 Bcf in stockpiles versus the estimated increase of 60 Bcf. This is in line with the previous week’s build of 71 Bcf, suggesting that supply and demand conditions were sustained somewhat.

Demand might still pick up in the coming months as warming weather conditions could drive up purchases of cooling commodities. However, risk-off flows stemming from potential Fed tightening and geopolitical tensions in the Middle East could curb investors’ demand for riskier assets like commodities.

Recall that the FOMC minutes suggested that some policymakers are warming up to the idea of tapering asset purchases as the US reported stronger than expected inflation for April. This could bring the central bank closer to hiking interest rates, which might then curb business and consumer activity down the line.