Natural Gas Futures Analysis: Bearish Pressure Continues Despite Recent Volatility Surge
Upon analyzing the movements of natural gas futures for Mar 25 (NGH5), it is evident that exhaustion is likely to persist in Feb. 2025. The current scenario suggests that a decline in futures prices may occur following the weekend’s weather forecast for a milder projection.
Last week, a severe Arctic blast swept across a significant portion of the U.S., a development that is expected to be reflected in a bullish inventory report this week. The front-month futures contract for natural gas has experienced a notable decrease and is currently trading at $3.165. It is anticipated that there could be a steep decline following the announcement of the weekly inventory today.
Although the bulls may attempt to outperform the bears temporarily today, any upward movement by the natural gas futures could be followed by a selling spree. This is due to Federal regulators granting permission to Venture Global to introduce natural gas into the seventh block of its Plaquemines plant in Louisiana, signaling a ramp-up in production of super-chilled gas.
Despite showing some strength on Wednesday, natural gas futures could not sustain levels above the immediate resistance at the 50 DMA of $3.474. The emergence of bearish pressure intensified after a bearish crossover was formed by the 9 DMA and 20 DMA in the Daily chart.
Thursday witnessed a gap-down opening followed by narrow-range trading, confirming the persistence of bearish pressure at current price levels. Today, natural gas futures are hovering at a critical juncture at the 100 DMA of $3.207, with the formation of an exhaustive candle indicating a potential steep decline despite any bullish movement after the weekly inventory announcement.
Readers are advised to consider their own risk tolerance when taking any position, as this analysis is based solely on observations.
In summary, the natural gas futures market is currently experiencing bearish pressure, influenced by recent weather events and production developments. Traders should remain cautious and monitor price movements closely to make informed decisions regarding their investments.