Undoubtedly, there is no official data on hedge funds pushing the natural gas futures to much lower levels, whispers are of a likely surge instead as traders have seen the lows hit by WTI Crude when it traded at minus $40 on Apr. 20, 2020.
Now the question is whether natural gas could behave in the same way or has it tested the lowest point of this year at $2.343 before the advent of a reversal.
Undoubted, whispers Crude futures regained normalcy the next day as the reversal was quite strong.
But in the case of natural gas futures, a reversal is not so easy as the rallies will be sold despite the change in momentum from bearish to bullish.
The same hedge funds could turn buyers from the lower levels at this time of the year as the winter season could take its toll any time.
Bullish Hopes
Traders are still long and could feel a few disturbing moments for bulls, but a reversal is still on the cards as the inventory announcement Thursday presented a withdrawal of 151 Bcf.
On Friday, Baker Hughes's total rig counts showing a decline from 771 to 759 could encourage bulls to remain in command.
Secondly, a powerful arctic blast swept into the U.S. Northeast on Friday, pushing temperatures to perilously low levels across the region, including New Hampshire's Mount Washington, where the wind chill dropped to 105 degrees below zero Fahrenheit.
Technically speaking, in a 15-minute chart, the natural gas futures hold at $2.377. A significant surge in selling pressure could result in a reversal if the futures close this week above the resistance at 200 DMA, which is currently at $2.478.
Undoubtedly, the opening of the first trading session of the week will confirm the further direction for natural gas prices as wild price swings could follow.
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.