Weather Shifts Cause Natural Gas Prices to Drop Despite Bullish Sentiment
2023.03.06 13:08
At the beginning of this week, experienced a surprising drop despite a previous upward trend, due to warmer weather over the weekend.
Friday’s weather data had predicted much colder temperatures, leading to a rise in prices at the end of last week. Although the weather from March 8-20 in the US is still expected to be relatively cold, it is not likely to be as severe as initially forecast, which may lead to some selling pressure. However, it’s likely that investors will continue to buy at prices above $2.6.
Uncertainty was apparent when prices hit the psychological resistance at $3 on March 3, despite bullish sentiment that had been growing since February 22, while it tested a low at $2.114. This uncertainty is typical whenever natural gas, the most liquid commodity in the world, trades around the $3 level.
Despite rapidly changing weather outlooks, natural gas bulls have been forming a base at $2.6 since February 23. The strength of these bulls cannot be underestimated, especially at such a low price level at this time of the year when delayed winters help keep bullish sentiment intact.
Some price hiccups are likely to be seen this week, but bullish sentiment will take final shape if the weekly opening gap is filled soon.
If prices rally above $2.767, they may push even higher to find touch $3.086, with a high likelihood of reaching $3.296.
Natural Gas Futures 1 Hr. Chart
Looking at the hourly chart, natural gas futures have massive support at 200 DMA, which is at $2.603.
I conclude that if natural gas holds this significant support in today’s trading session, the reversal could be sharp.
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 in the world.
