NatGas Futures Unsettled After Unusual Wednesday Move, Uncertainty Looms
Satendra Singh | Feb 22, 2023 07:36PM ET
Despite the long-time consolidation below $3 since Jan. 24, natural gas futures showed a few initial signs of bullish momentum after hitting a new low at $2.114 on Wednesday.
However, the futures faced resistance at the day’s high of $2.421 due to the 200 DMA at $2.405 in an hourly chart, which remains an immediate resistance.
Despite this, the reversal by natural gas futures is likely to continue till this weekly closing as NatGasWeather.com reports show a vast difference in temperatures across the US for the next several days due to frigid air over the northern US and widespread heavy snow, while Texas, the South, and Southeast will be warm with highs of the 70s and 80s.
Once the cold air over the Midwest includes the Northeast this Fri-Sat, demand is expected to increase significantly before decreasing early next week.
Despite a wobbly Wednesday, bulls tried to keep the price momentum strong amid hopes for a supportive inventory announcement on Thursday.
Technically speaking, in an hourly chart natural gas futures are still trying to sustain above the 18 DMA since the formation of a bullish crossover on Wednesday indicates a continuation of upward moves till this weekly closing.
On the other hand, a sudden surge in diplomatic moves globally by the Western alliance and Russia to justify their efforts over Ukraine seems to be a significant threat that, if not resolved patiently, could increase volatility in energy prices due to changing geopolitical equations.
Natural gas futures are still in the bearish territory but could rally from the current low levels as the bears could be trapped soon if the bulls find significant support above $2.777 before this weekly close.
In conclusion, natural gas futures could find a sudden surge in volatility on Thursday, and the wild price swings could deviate the direction if the bulls do not find sufficient support above $2.585.
Disclaimer: The author of this analysis does not have any position in natural gas futures. Readers are advised to take any position at their own risk; as natural gas is one of the most liquid commodities of the world.
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