Natural Gas Under Bearish Threats Despite Cold Weather
2025.01.23 12:53
Upon analyzing the movements of the futures, I find that the currently prevailing bearishness is likely to surge amid concerns over the possible impacts of the declaration of a national energy emergency by US President Donald Trump on his inauguration.
Nobody knows whether this strategy will have a positive or negative impact on natural gas prices in the near future, as today’s inventory announcements, indicating a bearish trend ahead after the lesser withdrawal than the expected levels, look evident enough to keep the bears on top.
Undoubtedly, after Monday’s exhaustive move, followed by an upward move the next day, it could not close above the immediate resistance at $4, perhaps confirming the growing concerns over the negative impact of upending energy policy, favoring more production even at a time of lesser demand at this time of the year.
I think that the heating demand for natural gas could start to diminish from Feb. 2025 while the steps to be taken ahead according to the new energy policy to encourage more production by providing more permits by the Trump administration amid hopes that fresh demand could be generated by creating higher tariff terror.
Undoubtedly, this phenomenon looks impractical as a higher decrease in demand could increase the cost of maintaining a sudden surge in oil and gas rigs only based on mere phenomena of fresh demand by imposing higher tariffs.
Technical Levels to Watch
Daily Chart: Natural gas futures are showing a surge in selling euphoria below the immediate resistance at $4 as today’s weekly inventory announcements confirm the advent of a steep fall this week.
Undoubtedly, a breakdown by the natural gas futures could push them to test the next significant support at 50 DMA at $3.448 during the next week.
4 Hr. Chart: Natural gas futures have formed two bearish candles and could generate a third bearish candle too due to a ‘bearish crossover’ by 20 DMA, trading below the 50 DMA.
However, the next significant support for the natural gas futures could be at 100 DMA at $3.808 during this downtrend.
Undoubtedly, a breakdown by the natural gas futures below this significant support could push them to test the next support at 200 DMA at $3.594 shortly.
Take Away for the Traders
Traders could sell any further upward move above $4 with a stop loss at 4.208 amid changing weather reports that might tilt towards more mild weather reports from the first week of the next month.
Traders need to remain cautious while trading natural gas futures as the volatility could surge more amid growing concerns over the impacts of the new energy policy.
Disclaimer: Readers are advised to create any position in natural gas futures at their own risk, as this analysis is only based on observations.
