Natural gas is trending higher on its 1-hour time frame, forming higher lows above a rising trend line and looking ready for another test of support.

This trend line coincides with the 100 SMA dynamic inflection point, which could add to its strength as a floor. A larger pullback could still find buyers at the Fibonacci retracement levels marked below.

The 38.2% Fib is at $4.557 and the 50% level is at $4.491. The 61.8% Fib is at $4.425 near the 200 SMA dynamic support.

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. The gap between the indicators is widening to reflect strengthening bullish pressure.

Stochastic has some room to head lower, which suggests that the correction might still keep going. The oscillator is approaching the oversold region to signal exhaustion among sellers, so turning higher would confirm that buyers are returning.

Once that happens, natural gas might resume the climb to the swing high at $4.770 or higher.

Natural gas is enjoying support on expectations that the inventory report from the Department of Energy might show a large draw in stockpiles. After all, weather disturbances in the past week likely disrupted production and weighed on output in the Gulf States.

As of Wednesday last week, the Bureau of Safety and Environmental Enforcement said operator reports indicated that around 83% of gas production in the GOM remained shut in, leading to 80% of its output being shuttered.

Earlier on, the Department of Energy reported a build of 20 Bcf, confirming that demand stayed supported even as temperatures started to drop in some areas. Purchases of cooling commodities might have slowed, however, as warmer weather is setting in.