Natural gas is trading sideways on its hourly time frame, finding support at $4.725 and resistance at $5.100. Price just bounced off the top of the range again and could be due for a move back to the bottom.
The 100 SMA and 200 SMA are oscillating to reflect consolidation, but a bullish crossover seems to be brewing. This could be enough to encourage more bulls to charge and break past the range resistance. If that happens, natural gas could climb by the same height as the chart formation.
However, RSI is pointing down to suggest that selling pressure is starting to pick up. The oscillator has room to move south before reflecting oversold conditions, so sellers could stay in control for the time being.
Stochastic is also on the move down and is halfway through on its slide to the oversold region. This suggests that there is still enough bearish pressure left for more declines.
Natural gas storage posted a slightly smaller than expected drop in stockpiles of 21 Bcf versus the projected 23 Bcf reduction. Still, this marked a pickup in purchases, as export activity likely depleted inventories.
Production remains elevated, with the Department of Energy reporting that output reached pre-pandemic highs. Output surged to more than 95 Bcf per day, hitting a nearly two-year high that comes as domestic operators stage a prewinter push.
Demand could also stay elevated in the near-term, as other countries undergoing an energy crunch could import natural gas from the US. Soon enough, temperatures are likely to drop low enough to spur demand for heating commodities as the winter season rolls in.
Volatility is expected to dip lower in the next few days, as most US traders will be off enjoying the Thanksgiving holidays. Still, keep in mind that the gradual reduction of monetary stimulus and potential rise in borrowing costs could keep a lid on commodity price gains.