Wild price swings pushed the natural gas to hit $9.412 on Tuesday as the hot weather has aided the rally since Jul. 20.
Monday, natural gas showed a strong bounce after sustaining above $8.222 amid growing noises of Russian moving to slow the flow of natural gas to Europe.
Tuesday, natural gas continued this rally after a breakout above $8.4 and hit the second peak of this season at $9.412.
Natural gas bulls tried to hit the recent peak of June 2022, as EU countries approved a weakened emergency plan to curb gas demand after striking compromise deals to limit cuts for some countries, hoping lower consumption will ease the impact in case Moscow stops supplies altogether.
On Wednesday, flows via Nord Stream 1 tumbled to 14.4 million kilowatt hours per hour (kWh/h) between 1200-1300 GMT. The drop comes less than a week after the pipeline restarted, following a 10-day maintenance period.
The overall scenario looks in favor of bears as they could turn aggressive below $8, as the double top formation could be disastrous for bulls as it can trap them above $8.5. A sustainable move below $7.3 on Tuesday after the announcement of the weekly inventory could drag the prices below $6.4.
Big price swings could continue as the bulls and bears have reasons to remain active amid growing uncertainty over Russia’s use of natural gas as a powerful tool to control the geo-political moves by Europe and the U.S.
Technically speaking, in the daily chart, futures showing extreme exhaustion after the formation of an Exhaustive Candle, formed on Tuesday, has got confirmation with the bearish candle, formed on Wednesday. I find the follow-up moves by natural gas on Thursday and Friday could continue the current weakness.
Disclaimer: The author of this analysis does not have any position in natural gas. Readers are advised to take any position at their own risk, as Natural Gas is one of the most liquid commodities in the world.