Natural gas is still trending inside its rising channel on the 1-hour chart, and a steeper uptrend might be due. Price is forming a bullish flag right below the channel resistance at $5.000.

The 100 SMA is above the 200 SMA to indicate that the path of least resistance is to the upside or that the channel top is more likely to break than to hold. If so, natural gas could climb by the same height as the flag mast, which span around $4.600 to $5.000.

However, stochastic is already indicating overbought conditions and turning lower to suggest that sellers could take over. RSI also looks ready to move down, so price could follow suit as bearish pressure picks up.

In that case, natural gas could pull back to the nearby support areas. The mid-channel area of interest is at $4.900 then the channel support is around $4.700-4.800. The channel bottom also lines up with the 100 SMA dynamic inflection point, which adds to its strength as support.

Natural gas prices are surging as traders anticipate weaker supply levels during the winter season. Output has been halted by weather disruptions, with the US side of Gulf of Mexico seeing about 78% production offline more than a week ahead of Hurricane Ida’s arrival.

Still, the Department of Energy is expected to report a slightly stronger build in stockpiles of 38 Bcf versus the earlier 20 Bcf, as demand likely took hits from lower temperatures. This weighs on demand for natural gas as a cooling commodity for the time being.

Bespoke Weather Services still noted that summer-like heat is intensifying “as upper-level ridging flexes its muscle, owing to the La Niña base state, which typically is a warmer/hotter signal at this time of the year.” This could mean that purchases might stay supported before the winter season draws near.