As shown on the XNG/USD chart today, natural gas prices are trading around $3.960 per MMBtu — the highest level in over a month. This week’s series of bullish candles confirms strong demand.
Natural gas is becoming more expensive due to concerns over the military conflict between Iran and Israel. According to media reports:
→ Israel has attacked Iran’s South Pars gas field, and Donald Trump has called for the evacuation of Tehran.
→ Market participants fear that a blockade of the Strait of Hormuz could disrupt oil and natural gas supply chains.
In addition, forecasts of extreme heat in the US and increased demand for gas-powered air conditioning are also pushing prices higher.
Technical Analysis of the XNG/USD Chart
The chart shows that since mid-May, natural gas price movements have formed a narrowing triangle, suggesting a temporary balance between supply and demand.
However, the triangle has been broken to the upside — a sign of demand strength — with the price:
→ breaking through resistance at $3.800 per MMBtu;
→ forming the outlines of an ascending channel (shown in blue).
The following factors could act as resistance to the current upward move in natural gas prices:
→ the upper boundary of the channel;
→ the psychological level of $4.000 per MMBtu, near the May peak.
However, given that the hottest months of summer lie ahead and the situation in the Middle East remains highly volatile, it is reasonable to assume that the upward trend may continue.
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