Analysis: Bearish Pressure Surges After Trump’s Energy Emergency Declaration
Since US President Donald Trump’s inauguration, the movement of the energy markets has been closely scrutinized. The recent surge in bearish pressure indicates uncertainty surrounding the sustainability of prices in the near term. The declaration of a national energy emergency by President Trump has had diverse effects across various fronts.
The weakening of the US Dollar highlights concerns about increased oil and gas production. Intense negotiations may ensue to ensure a steady supply to buyers, potentially surpassing US production levels. The length of this energy emergency period remains unknown, but the reliability of long-term energy policy is crucial for buyers seeking consistent LNG supply.
Expanding LNG exports could result in more favorable terms and a robust supply side, aligning with Trump’s agenda to enhance oil and gas production and develop new LNG projects. However, maintaining a strong US dollar is essential for negotiations and flexible supply contracts with major buyers, as a weaker dollar could lose its effectiveness.
Trump’s focus on strengthening the US currency could impact the supply crunch amid rising production, especially if higher tariffs are imposed on Asian and European nations. The recent increase in US dollar bearishness provides insight into the compatibility of the new energy policy, despite previous fluctuations before Trump’s inauguration.
Technical Levels to Watch
In the daily chart, natural gas futures show weakness near the immediate support at the 20 DMA of $3.797, with potential for a decline towards the next support at $3.711. In the 4-Hr. Chart, natural gas futures are attempting to hold significant support at the 100 DMA at $3.818, despite a bearish crossover.
Takeaway for Traders
Traders could consider taking a short position if natural gas futures move above $3.946 before Friday’s close, with a stop loss at $4.046 and a target at $3.466 for the following week.
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Disclaimer: Readers should make trading decisions at their own risk based on this analysis.