Natural Gas: Sustainability Concerns Likely to Intensify Bearish Pressure
2025.01.24 16:41
Upon analyzing the movement of the since the day US President Donald Trump was inaugurated, I find that surging bearish pressure says a lot about the sustainability of the prices in the near term. Developments across various fronts reflect a diverse impact following President Trump’s declaration of a national energy emergency.
The weakening of the US Dollar undeniably signals growing concern over increased oil and gas production. This may lead to intense negotiations, as a supply crunch could be detrimental if the Trump administration ensures a steady supply to buyers, surpassing US oil and gas production levels.
No one knows the length of this energy emergency period, but the sustainability of long-term energy policy matters a lot for buyers who remain focussed upon the reliability of regular and fast supply of LNG.
However, expanding LNG exports to Asia and Europe could lead to more favorable terms, maintaining a strong supply side. This aligns with Trump’s policies to boost oil and gas production and develop new LNG projects that demand long-term sustainability.
Conversely, maintaining a strong US dollar is critical amid increasing negotiations and flexible supply contracts with major buyers, as a weaker dollar could lose its strength.
Trump’s primary goal of strengthening the US currency could impede the supply crunch amid rising production, particularly if higher tariffs are imposed on Asian and European countries.
Additionally, the abrupt surge in US dollar bearishness on Friday provides insight into the new energy policy’s compatibility. Despite a previous surge before Trump’s inauguration, natural gas futures indicate weakness.
Technical Levels to Watch
In the daily chart: atural gas futures exhibit substantial weakness, trading just above the immediate support at the 20 DMA of $3.797. A drop below this level could lead to a decline, reaching the next support at $3.711.
In the 4-Hr. Chart: Natural gas futures are trying to hold significant support at 100 DMA at $3.818, despite the formation of a bearish crossover with a downward move by 9 DMA and 20 DMA below the 50 DMA.
Take Away for the Traders
Traders could take a short position in case of any upward move above $3.946 before Friday’s closing with a stop loss at $4.046 for a target at $3.466 for the next week.
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Disclaimer: Readers are advised to take any position at their own risk as this analysis is based only on observations.
