Natural gas is in selloff mode recently, but the commodity remains in a longer-term uptrend. Price could make its way down to test the rising trend line visible on its daily time frame next.
Price just broke below a short-term head and shoulders pattern, signaling that a selloff is underway. This could lead to a drop down to the $7.000 area near the trend line and 200 SMA dynamic inflection point.
On the subject of moving averages, the 100 SMA is above the 200 SMA to confirm that the path of least resistance is to the upside or that support is more likely to hold than to break. In that case, buyers could defend the support zone and allow the longer-term uptrend to resume.
Stochastic is heading down but already dipping into the oversold region to signal exhaustion among sellers. Turning back up would mean that buyers are ready to take over.
RSI has a bit more room to cover before reaching the oversold area, so sellers could stay in control until it does.
Natural gas is on weak footing following a larger than expected build in stockpiles reported by the Department of Energy. Inventories rose by 103 Bcf versus the estimated increase of 97 Bcf and the earlier 77 Bcf build, reflecting a drop in demand.
Lower temperatures are mostly to blame for the reduction in purchases for the week, as businesses and households likely trimmed demand for cooling commodities. However, demand could pick up soon enough as winter draws closer.
Also note that resurfacing tensions in Russia might revive fears of an energy crunch, which might spur stockpiling activity ahead of the colder season. Earlier this week, Putin announced partial mobilization of their military, which could mean more geopolitical risks weighing on risk appetite.