Natural gas continues to sink

Natural gas prices continue to decline. Gas launched today's session with a bearish price gap and the price continues recent pullback, which is related to the ongoing good weather in the US, despite previous forecasts, which predicted lower temperatures. The relatively high temperature compared to the average means that the gas consumption is lower and the inventories decrease at lower rate than expected.

Currently, price is testing the local low of October 2. The nearest target for sellers is located around 2.30. A break below this level may open the way for a bigger declines towards 2.2 and 2.0 levels. January contract is currently being traded and it will roll over in a week's time. Another February contract is trading just $ 0.01 higher than today's one, and the March contract is already trading lower, which is related to the expectation of lower demand in March.
It is worth noting that we are dealing with two potential head and shoulders formations, basically with a similar price range, indicating further declines towards around 1.8 level. Seasonality shows that the declines should last at least until around December 22.

Natural gas continues to decline. The potential target of a head and shoulders formation is located around 1.8 level. The next two rollovers will not be too significant, but trading before mid-February will carry a high risk of rollover (to the downside this time). Source: xStation5

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