Longer Than Expected Winter Likely To Favor Natural Gas BullsMarch 5, 2023
According to analysts, the creation of a bullish hammer pattern in February has led to an increase in natural gas futures.
Moreover, natural gas futures are perfectly positioned to reach new levels in near future. Most traders had doubts about the bullish market’s strength following a 10-week decline.
One of the biggest reasons that investors were skeptical of gas futures prices was the recent selling pressure on the commodity.
The fact that natural gas futures remained bearish in January and February was hotter than expected winters.
This has resulted in a decreased demand for gas and an excessive supply. Hence the price of natural gas became immensely bearish throughout the two months.
But With the Start of March Hopes Improved
The recent rumors about the price of gas have given investors some relief that gas prices can go bullish in the near future.
As the result, gas futures rose above $3 due to the unexpectedly prolonged winter when the weather suddenly changed last Friday.
Although there was a strong trend of lesser demand than supply.
But for the first time in three trading sessions of March, gas has provided positive momentum for the bulls to maintain an upward trend.
Back on Thursday, the demand for gas was high, as companies consumed nearly consumed 81 Bcf of gas.
Despite this fact, this consumption level is higher than expected.
But for the past five years’ average consumption for the month of March, the current number is lower by -134 Bcf.
What Is The Weather Outlook for March?
As far as weather is concerned for the month of March, on March 3-9, the weather is likely to remain immensely cold.
The weather reports showing strong storms, rain, snow, and cold winds can rampantly push the demand for gas higher.
This is likely to give the price of gas the attention it deserves.
High demand means a high price for the futures of gas. It is important to mention that this gas trend is not true for the entire U.S.
As compared to northern areas, the southern and eastern territories of the USA are likely to remain hotter.
Next week, there will be a drop in temperature with a colder weather pattern affecting the northern and southern regions of the United States.
The northern part of the US will experience frosty lows ranging from -0s to 20s while the southern part will experience a 20s to 40s temperature range.
The Technical Indicators of Gas Price
On the flip side, the technical look shows that the bullish trend formed in February 2023 on the monthly chart received confirmation during the first three trading sessions of March.
It is expected that the upcoming expected boom in the price of gas is likely to stay for an extended period of time.
Moreover, the latest weekly trend on the chart remained separated from the preceding bullish weekly candle by a gap.
Assuming there is a high starting price for natural gas at the beginning of the upcoming week, it is expected to remain above the immediate weekly resistance point of $3.213.
If gas maintained its futures price above $3.213 for an upcoming couple of weeks, the bulls will surely push the gas to a new level price of $3.755.
It has also been shown that at this very moment, the price trend of gas is very strong and stable.
Conversely, in the event of the futures market commencing the following week with a gap in the downward direction, there is a possibility of gas touching $2.448.
Moreover, it can cause a strong reversal, which means the bullish trend talks about the price of gas in the future might become bearish.
This means the price of gas will plunge during the first trading session of the new month.
As the price of gas futures is down at the moment. It is the right time for investors to invest in the gas futures market.