Natural Gas: What's Behind This Week's Price Fluctuations
Satendra Singh | Jul 27, 2023 15:11
Upon analyzing this week's movements of natural gas futures, it becomes evident that the bulls are striving to maintain the August futures above $2.676, with the aim of experiencing wild price swings upon expiration on Aug. 27, 2023.
The recent price consolidation phase seems to be a significant factor contributing to a sudden surge in demand. This is largely due to increasing expectations for high pressure that may persist over the southern, western, and eastern US, resulting in temperatures ranging from the upper 80s to lower 90s.
According to natgasweather.com:
“The hottest patterns of the past 40+ years for July 26-30 with highs of upper 80s to 110s over most of the US and little coverage of comfortable highs of 70s to lower 80s for very high demand/CDDs. However, weather systems arriving over the Great Lakes and Northeast Aug 1-7will drop national demand from to only slightly stronger than normal, but with the EC several CDDs hotter v/s the GFS. Expiration of Aug’23 contracts Wed-Thu likely to aid wild swings this week”.
Looking at the 4-Hour chart, there is substantial support at the 200 DMA ($2.627), which appears to be a strong buying point that could potentially drive prices toward the psychological resistance level at $3 before the week's closing.
I expect that the ongoing consolidation phase, with natural gas futures holding above the immediate support at $2.653, is likely to continue today, and this could lead to volatile price swings following the announcement of weekly storage data.
In conclusion, should the August futures experience a sudden dip to $2.448, it may present a favorable opportunity for long positions. Conversely, if there is a sudden surge above $3.248, bears may be attracted to short positions.
Disclaimer: The author of this analysis does not have any position in Natural Gas futures. All readers should create any position at their own risk as Natural Gas is one of the most liquid commodities in the world.
Get The App
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.