Natural Gas Futures Recovers Significantly From Bullish GripFebruary 16, 2023
Natural gas whose price has been bearish since the start of 2023 has seen some hope. The positive indicators are subjected to the natural gas futures.
According to the stats natural gas futures market struck a breakthrough in its pursuit of getting out of the bearish zone. As a result by the end of the trade weekend, the high-selling spree saw some reluctance from the traders.
Moreover, the slight resistance from investors regarding selling the natural of natural gas give much-needed strength to the commodity.
Despite the fact that natural gas has made recovery, experts are certain if the gas price failed to remain above the current level of resistance at $2.658, it will again fall into the bearish trap.
The bounce back was expected due to the weekly low of the previous week and the high of this week.
The Future of Natural Gas Remains Shaky
Although the current recovery of the commodity in the futures market is the first time that bulls are hopeful about the future of natural gas prices in 2023, this hope could be short-lived without the strong performance.
As of now, the weather reports in the U.S. and Europe Zone are not favorable for the natural gas demand.
The reports are predicting that the coming week might see a further spike in temperature, which means the demand for gas in comparison with supply with further decline.
The messy reports suggesting the lower demand for gas are killer for gas price recovery in the open market.
As per the last week’s EIA report, the current storage of natural gas is 2.366 trillion cubic feet, which means as compared the last year’s storage level this year’s storage level has exceeded by 10.9%.
The logic behind this increased storage is simple, the humid winters, as the result the consumption of natural gas especially in the residential sector has significantly declined so far in 2023.
Conversely, last week almost 217 billion cubic feet of natural gas has been withdrawn from the reserves, the highest weekly consumption of 2023, so far.
The Upcoming Market Trends Will Define the Future of Gas
As the market opens up again on Monday, the future direction of the natural gas demand and price will be decided by the technical indicators by the end of Monday.
As of the latest information the natural has fightback slightly, but all this pomposity can go in vain if the demand for natural gas decreased in the coming week.
Now, Monday’s weekly opening has become immensely important. Despite all the uncertainties, it is expected that natural gas will carry on the previous week’s momentum, which means that a price hike can be expected.
But the surge in the price is only possible if the commodity maintained its current level above the $2.790 level of resistance for the entire upcoming week.
As far as technical indicators are concerned they are some possibilities of a gap-up. However, the natural gas somehow reached the next level of resistance at $3.754, it will surely get the much-needed bullish support.
The daily chart showed that on Friday, the natural gas futures has been consistently higher than their 9-day moving average of $2.888.
This means that if the futures start the next week with a higher opening price, it could reach its 18-day moving average of $2.815.
However, the experts do believe that before investing in the natural gas futures, investors must look at the overall picture, rather than just relying on the technical indicators.
Natural gas is one of the most liquid commodities in the market, hence its technical indicators can change in hours from positive to negative.
That is why a careful and highly proactive approach is needed. Despite the slight recovery, the demand for gas will pave the way for gas to continue to stay strong for weeks to come.
So, demand has always been the primary factor that should be kept in focus while thinking about investing in the natural gas futures market.