Weekly Outlook on Natural Gas - 22 December 2023

The natural gas market faced a range bound momentum, closing at 206.2, driven by increased production, revised temperature forecasts lowering heating demand, and expectations of reduced gas withdrawal from storage by December's end. Despite these challenges, a rise in gas flows to LNG export facilities and an uptick in demand forecasts for the current week provided some offset. Record production levels and ample reserves led some traders to speculate that winter prices may have peaked in November. December saw a surge in gas output to 108.6 billion cubic feet per day in the lower 48 U.S. states. Warmer weather projections until January 1 and a return to near-normal conditions from January 2-4 were noted. U.S. pipeline exports to Mexico dropped from 5.6 bcfd in November to 3.9 bcfd in December. 

COMEX natural gas prices exhibit a bearish flag pattern on the weekly chart, maintaining a position below it. The recent formation of a DOJI candlestick signals trader indecisiveness, yet the overall trend remains bearish for the short term, anticipating some short covering in the near future. Support is identified around $2.38 & 2.25, while resistance lies at $2.76. 

Domestically, MCX natural gas price trend aligns below the Ichimoku Cloud and near a Bollinger Band, indicating a bearish momentum for the short to long term. In additions, Prices are trading below the 200-days Exponential Moving Averages and rising trendline, the momentum reading suggests an oversold territory with lower volume. Support is evident at Rs.200 and 182 levels, with resistance at Rs.228.

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