US Natural Gas Futures fell more than 10% on Tuesday, reversing monday surge in which the contract rallied more than 10% at one point to exceed $8 per million British thermal units and hit the highest level since September 2008.
Henry Hub prices fell 10.2% on Tuesday to trade at $7.02. The May contract is now down about 13% from Monday’s high.
Natural gas has been on the upswing since the Russian invasion of Ukraine. The contract is coming off five straight weeks of gains and is still up nearly 90% for the year.
Matt Maley, chief market strategist at Miller Tabak, said on Monday that natural gas looked ripe for a pullback from a technical perspective. Pointing to the relative strength index, which is an indicator of momentum, Maley said natural gas was the second most overbought since 2003.
“Its RSI chart is now at levels that have been followed by short-term pullbacks in the past,” he noted on Thursday. “We remain bullish on natural gas (and natural gas-related stocks), so we’re not saying investors should take profit here. Instead, [are] simply saying that investors should avoid chasing these assets in the short term.”
Prices rose on Monday due to forecasts of cooler spring temperatures, the fuel switch from coal to natural gas and the shipment of record amounts of LNG from the US to Europe.