Natural gas is retreating from its climb after hitting highs at $6.245. Price is dipping to the 38.2% Fibonacci retracement level, which seems to be holding as support.

If this is enough to keep losses in check, natural gas could resume the climb back to the highs or beyond. A larger pullback could reach the 50% level at $5.482 or the 61.8% Fib that lines up with the 100 SMA dynamic inflection point at $5.302.

The 100 SMA is above the 200 SMA to indicate that the path of least resistance is to the upside or that support levels are more likely to hold than to break.

Stochastic has not quite reached the oversold region yet, but the oscillator seems to be bottoming out and heading higher to show that buyers are returning. RSI has more room to head lower, so a larger correction could take place until the oscillator indicates exhaustion among sellers.

Natural gas prices are on a tear, as analysts are predicting another supply crunch coming from weather disturbances. Hurricane Ida previously left majority of facilities offline and needing repairs for weeks, leading to lower output levels.

Even so, demand also took hits recently due to changing weather conditions weighing on demand for cooling commodities. The upcoming inventory report from the Department of Energy is slated to show a slightly larger build of 86 Bcf versus the previous 76 Bcf gain, reflecting weaker purchases for the previous week.

However, expectations that the upcoming winter season will be one of the most expensive ones on record in terms of heating commodities are driving stockpiling activity. This might have led to a bump up in purchases recently, as businesses are likely inclined to load up on natural gas before prices get any higher as winter draws near.