Natural gas continues to gain traction on its climb, as price is breaking above the 38.2% extension level and seems to be eyeing the next upside targets.

The 50% extension is at $6.032 then the 61.8% level lines up with the swing high at $6.212. Stronger bullish pressure could take it up to the 76.4% level at $6.434 or the full extension at $6.794.

The 100 SMA is safely above the 200 SMA to confirm that the path of least resistance is to the upside or that resistance is more likely to break than to hold. Price already found support at the dynamic inflection points at the moving averages, so these could continue to keep losses in check.

However, stochastic is already indicating overbought conditions or exhaustion among buyers, so turning lower would mean that sellers are returning. RSI has some room to climb so buyers could stay in control, but the oscillator is also approaching the overbought zone.

Natural gas carried on with its climb, even though the Department of Energy reported a slightly higher than expected increase in stockpiles. Inventories rose by 88 Bcf versus the estimated 86 Bcf gain and the earlier 76 Bcf increase, suggesting that demand took a hit as temperatures dropped in the past week.

This could be the case in the next couple of months, as milder weather conditions weigh on demand for cooling commodities. Then again, supply disruptions are eyed since tropical storms are on the horizon, possibly leading some facilities to be shut-in.

Demand will likely pick up before the year comes to a close, as winter season approaches and lifts purchases of natural gas. Analysts are still sticking to forecasts of a very expensive winter in terms of heating supplies, so businesses might be keen on stockpiling earlier than usual and boosting demand before December.