Despite bullish momentum during the last week, bears were selling rallies in natural gas prices generated wild price swings.
Friday, high pressure ruled most of the U.S., with highs of the 90s and 100s besides the 80s near the Canadian border continued to generate high price swings from the low at $3.898 to the high at $8.248.
No doubt this was a narrow price range of a mere $1, but the price swings indicate both the bulls and bears have reasons to remain aggressive during the upcoming week. Still, the trend could continue to favor the bulls as the hot high pressure will continue to rule nearly the entire U.S. early this week, with highs in the 90s and 100s.
On the other hand, the second-largest U.S. exporter, Freeport LNG's Texas plant, continues to remain shut since an explosion in early June. Its partial restart is not expected until October, curtailing the U.S. export capacity, even amid buoyant demand in Europe.
The Panama Canal has seen a 30% fall in the traffic of vessels carrying liquefied natural gas (LNG), driven by Asia's weak demand for U.S. LNG and limited exports from the U.S. Gulf Coast since a terminal explosion in June.
Before the incident, the Panama Canal - the main waterway for North America's energy exports to Asian destinations had already seen a reduction in LNG vessel transit as U.S. producers focused on supplying European customers to replace Russian gas.
Technically speaking, in the weekly chart, the natural gas futures found a strong reversal above the 9 DMA from the week’s low at $7.564 and tested a weekly high at $8.475 before closing the week at $8.064.
Last week’s movements still show the impact of the big exhaustive candle formed in the prior week, but the 9 DMA support still looks quite strong in the weekly chart.
In the daily chart, the natural gas futures faced stiff resistance at 9 DMA at $8.484. Support was visible at the upper band of the ‘Ichimoku Clouds’ amid growing volatility. On the lower side, 26 DMA could provide strong bounce as the big bulls set to come out of their den at every downward move above $7.372.
In case of an upward move, $9 still seems to be a stiff resistance for the natural gas futures, and only a breakout above $9.4 could push the price above $10.
Expected Weekly Opening Levels
In the hourly chart, the natural gas futures show weakness as Friday’s closing is well below the lower band of the ‘Ichimoku Clouds’.
Finally, I conclude that the opening of the first trading session of the upcoming week will define the further directional moves for the Futures. But, wild price swings will keep the trend in the upward direction as the sentiments are still bullish due to the sudden surge in weather-generated demand with hot temperatures amid supply constraints up to October 2022.
Disclaimer: The author of this analysis does not have any position in natural gas futures. Readers are advised to take any position at their own risk, as Natural Gas is one of the most liquid commodities in the world.