Natural gas prices have been bearish since December and the decline picked up pace by mid-January as the winter weather in Europe and the US turned milder. Still, household gas prices in the US are expected to increase again following EQT’s announcement of a production cut.

Natural Gas H4 Chart – Retracing Higher Before Resuming Downtrend?

Natural Gas prices took a steep bearish turn in the second week of January, after the cold snap in the US and Europe ended and a warm winter followed. LG lost more than 50% falling from $3.30s to around $1.50, where it found support. It has been trending higher in the last two weeks, probably helped by the bullish momentum in crude Oil prices, with moving averages acting as support. Commodities in general has been bullish recently.

But, yesterday the 200 SMA (purple) stopped the climb just below $2. While the 20 SMA (purple) is keeping Gas prices supported on the H4 timeframe, pushing the lows higher, the 200 SMA is acting as a barrier at the $2 level, which in itself is a psychological barrier. Now the price of Gas is being squeezed between 2 MAs, so let’s see if there will be a breakout today. If the 200 SMA is broken, the next target will be the bearish gap from February at $2.40-2.60, otherwise, we will head back down to $1.50.

EQT and Chesapeake Reduce Gas Production

The announcement by EQT to lower production by 1 Bcf per day in March has significantly impacted gas prices, leading to a  7% increase. Gas prices surged to $1.997, marking the highest level since the first week of February. This decision by EQT comes after Chesapeake Energy’s announcement two weeks ago to reduce production by around 0.8 Bcf, which also influenced the natural gas market. Despite the mild winter, US natural gas storage levels remain extremely high. EQT intends to maintain the production curtailment through March and will reassess market conditions thereafter.