Natural Gas: Winter 2022 Could Be A Repeat Of 2014, Including Price Action
Satendra Singh | Jan 15, 2022 06:43AM ET
Forecasts say there could be a mix of cold systems and warmer breaks from Jan. 15-20 for near seasonal demand. The most important is a frosty pattern, expected to appear over the northern half of the US that could generate strong national demand during Jan. 21-24 due to widespread lows of -20s to 20s.
The primary question is whether the cold pattern during Jan. 21-24 foretold in upcoming model runs, holds, and if so, will the cold into Jan. 24-26, which we believe to be likely. Each new weather model run will be closely watched by the natural gas markets to see if they keep Jan. 21-27 cold enough to intimidate.
Bulls seem more skeptical about jumping back in after yesterday's wipe-out, but a sharp pullback last Friday created a bullish hammer in the daily chart.
Undoubtedly, a steep surge in trading volume would confirm an uptrend during the upcoming week and the pace of this uptrend could attain more bullish momentum during the last week of January 2022, since the pattern for Jan. 20-27 is still frigid, and includes a couple of the most impressive Arctic blasts so far this winter.
Looking at the weekly chart, NG closed the last week at the same level where they started a wintry move in January 2014. Undoubtedly, the 2013-14 North American winter was one of the most significant for the United States, due in part to the breakdown of the polar vortex in November 2013, which allowed frosty cold air to travel down into the United States, leading to an extended period of extremely cold temperatures.
This time too, NG technicals indicate a sudden surge in cold weather during the winters of 2021-22. If the weather pattern turns into the same path taken in January 2014, NG could test $6.526 once again.
On the lower side, if natural gas futures move downward during the upcoming week, first support will be at $4.187, second at $4.076, and the final, $4.040. That could provide strong buying support for NG prices during the upcoming week, while a sustainable move of the natural gas futures above $4.577 will indicate a breakout that could keep the price above $5.445.
Technically speaking, the NG created a bullish crossover in the daily chart on Jan. 11, 2022, with a crossover of 9 DMA and 26 DMA crossing the 200 DMA on the upper side. That confirms a breakout move during the upcoming weeks.
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