The price of natural gas, as depicted by the XNG/USD chart, has hit a new low, dipping below $2.16 today for the first time since August 8th. This decline is primarily attributed to bearish market sentiment driven by two key factors:
– Seasonal Demand Shift: As summer draws to a close, the demand for natural gas for air conditioning is expected to decrease, leading to a potential drop in overall consumption.
– Ample Gas Storage: Current gas storage levels are significantly higher than the seasonal average, suggesting a surplus supply.
A technical analysis of the XNG/USD chart further reinforces the bearish outlook. The price action has formed a descending channel, with the recent bearish rounding reversal pattern indicating a potential continuation of the downward trend. Additionally, the breakdown of support levels and the increasing shallow angles of the fan-shaped support lines suggest weakening demand.
While there is a possibility for a short-term rebound based on support from the trendline, the overall bearish sentiment and the ongoing supply-demand imbalance suggest that natural gas prices may continue to decline within the descending channel in the longer term.
FXOpen offers spreads from 0.0 pips and commissions from $1.50 per lot. Enjoy trading on MT4, MT5, TickTrader or TradingView trading platforms!
This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
The subject matter and the content of this article are solely the views of the author. FinanceFeeds does not bear any legal responsibility for the content of this article and they do not reflect the viewpoint of FinanceFeeds or its editorial staff.
