Predictions of a mild winter in the U.S. are putting pressure on natural gas futures. Although the reduction in the number of rigs has the potential to create a drawdown in supply, lower demand could offset any decrease in inventory.
Last month’s weak close has nearby monthly natural gas in a position to decline during December. Although there was an attempt to breakout to the upside when the market crossed a long-term downtrending Gann angle at 3.194, the rally fizzled, leading to a resumption of selling pressure. An uptrending Gann angle at 3.412 could provide some temporary support, but a break through this angle is likely to trigger further downside pressure.
The main range is 6.528 to 2.772. This range has created a retracement zone at 4.650 to 5.093. Two months ago, the charts looked as if this zone was going to be tested, but the buying stopped when the market reached 4.133.
The current short-term range is 2.772 to 4.133. This range has created a key pivot price at 3.453. November’s close was slightly above this price level, putting the market in a position to take it out in early December.
In summary, forecasts of above normal temperatures across key demand areas in theU.S.are likely to mean a resumption of selling pressure. Technically, a potential support cluster at 3.453 and 3.412 could attract some buyers, but breaking through this level will put the market in a weak position.