As the XNG/USD chart shows today, natural gas is trading around $3.333/MMBtu, although yesterday morning the price was approximately 7% higher.
According to Reuters, the decline in gas prices is driven by:
→ Record-high production levels. LSEG reported that average gas output in the Lower 48 rose to 107.2 billion cubic feet per day so far in July, surpassing the previous monthly record of 106.4 billion cubic feet per day set in June.
→ Favourable weather forecasts. Although the peak of summer heat is still anticipated, forecasts indicate that temperatures over the next two weeks may be lower than previously expected.
As a result, today’s XNG/USD chart appears bearish.
Technical Analysis of the XNG/USD Chart
The chart indicates that since mid-May, natural gas prices have been fluctuating within a descending channel (marked in red), with July’s peak (E) highlighting the upper boundary of the pattern.
A key resistance area is now represented by a bearish gap, formed between:
→ the former support level at $3.525;
→ the $3.470 level – which, as the arrow suggests, is already showing signs of acting as resistance.
Under these conditions, it is reasonable to assume that the price may continue forming a downward market structure A-B-C-D-E, consisting of lower highs and lows, potentially moving towards the channel’s median – which approximately corresponds to July’s low (around the $3.200 level).
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