Natural gas continues to hover around support at $5.350, still unable to decide whether to bounce or break lower. Technical indicators are suggesting a bearish move.

The 100 SMA is below the 200 SMA to confirm that the path of least resistance is to the downside or that support is more likely to break than to hold. Price is also moving below indicators, so these could hold as dynamic resistance on pullbacks.

Stochastic is heading down after reaching the overbought area, suggesting that sellers are taking over while buyers take a break. RSI has some room to move up, though, so natural gas price might follow suit while buyers have some energy left.

In that case, price could still recover to the nearby inflection points around $5.575 to $6.000.

Natural gas is still supported mostly on account of supply shortages all over the globe. Production has been halted in some parts of China due to the floods, which could drive up global demand.

The latest trade balance confirmed that China’s total natural gas imports in September, including both piped and liquefied natural gas, rose to the highest since January this year to 10.62 million tonnes. Data revealed that several companies are already stockpiling before prices rise even higher.

Although demand in the US has slowed on account of cooling temperatures weighing on natural gas purchases, supply is also limited due to tropical storms and possible production outages.

The upcoming inventory release from the EIA might show a larger build in stockpiles, though, as demand for cooling commodities is significantly lower at this time of the year. Purchases of heating commodities could pick up later on, possibly leading to an expensive winter season.

A smaller build or a surprise draw might suggest that stockpiling activity is in play, possibly leading to a strong bounce for natural gas price.