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Natural Gas Hits Six-Month Low Falling Through Major Support Level


Natural Gas prices reached a six-month low on the back of larger than expected supply levels in the United States. Natural Gas spot price fell 1.08% to 4.12.

The U.S. Energy Information Administration reported that natural gas storage levels for the week ending July 4 increased by 93 billion cubic feet - expectations had been for 92 billion with the five-year average increase for this week being just 72 billion. 

Additionally, cooler weather is expected over the next while through the Northeast and Midwest, which if continues as a trend over the summer will continue to put downward pressure on natural gas prices.

Looking at the chart for natural gas spot prices we see that there was little support found at the 200 day moving average and after a sharp move below on July 7 has led to continual down days in the natural gas market.

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This is the first time the price of natural gas has fallen below the 200 day MA since late last year after a colder winter. Looking ahead, it will be interesting to watch if a strong downward trend emerges to take natural gas prices back to 2012 levels ($2-3) or if this is simply a short-term move.

Over the last three years, natural gas has ranged between $1.90 - $6.40 making it an attractive commodity for traders looking for big moves. A near-term key level of support from a technical perspective is $4.00 which was tested several times over the last three years as both a resistance and support point. Traders should keep a close eye on trading around this level as an indicator of the overall trend in natural gas:

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