Despite a significant injection announcement on Thursday, Natural Gas Futures had a bumpy ride amid growing possibilities on the next directional move and the targets.
Undoubtedly, the majority of voices look to be in favor of more upside to test the next psychological resistance at $6. But, Monday morning will determine what unfolds with the opening levels on the first trading session of the upcoming week.
Firstly, I find that despite a reversal on the last trading session of the previous week, natural gas futures finally closed the day just below the 9-day moving average that could be the primary indication in favor of natural gas bears.
Secondly, expectations are growing for warmer weather in most parts of the United States during the next two weeks, increasing cooling demand. Hurricane fears have subsided for now as hurricane Sam has weakened to a tropical storm. It is unlikely to have any impact on the natural gas infrastructure.
Based on my analysis of the natural gas futures, the last week’s closing at $5.140 more or less seems to be a replica of its move on Sept. 20. I find that the natural gas futures could slide as the exhaustion persists on every upward movement since it tested the seven-year peak on Sept. 16.
Finally, the law of gravitation could come into play for the natural gas futures. It states that an object hurled in the air without any propulsion is bound to come back down. Similarly, natural gas prices that shot up, anticipating hurricane Ida to cause destruction, threatening production and supply of natural gas in the Gulf of Mexico and Texas, to be wiped out completely.
The power outage has been restored, and repair work of ports is in full swing. I find that the overall scenario indicates the law of gravitation could manifest, resulting in a steep fall of natural gas futures shortly.
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 of the world.