Natural gas is still cruising inside its ascending channel on the short-term chart, and price seems to be finding support at the mid-channel area of interest.
A larger correction could reach the Fibonacci retracement levels, with the 38.2% Fib lining up with the channel support around $5.200. The 50% level is at $5.124 then the 61.8% Fib is at $5.069 and in line with the 100 SMA dynamic support.
On the subject of moving averages, the 100 SMA is above the 200 SMA to indicate that the path of least resistance is to the upside. In that case, support is more likely to hold than to break. The gap between the indicators is also widening to reflect strengthening bullish momentum.
Stochastic appears to be turning higher to show a return in bullish pressure. RSI is on middle ground, though, so the consolidation could carry on.
If any of the Fibs hold as support, natural gas could recover to the swing high at $5.360 or the channel top closer to $5.400 soon.
Natural gas continues to climb, as traders are predicting that the Department of Energy report could show a large draw in stockpiles. After all, majority of production was taken offline in the past week due to Hurricane Ida.
In addition, some facilities are still offline as repairs are needed and could take a while. This could mean that the downside pressure on supply might persist in the coming weeks.
Although temperatures are starting to cool down and weigh on demand for cooling commodities, the large reduction in supply would likely keep prices elevated.
Note that natural gas is trading at record highs, which could drive businesses to stockpile ahead of the winter season. Analysts are already predicting that the upcoming winter could see the most expensive heating costs in a while.