On Friday, natural gas futures are facing exhaustion soon after the comments by the U.S. President-elect Donald Trump.
Donald Trump says that the European Union must purchase U.S. oil and gas to compensate for its “tremendous deficit’ with the world’s largest economy, or face tariffs.
This statement makes a lot of sense for natural gas traders who might feel skeptical about the impact of other factors on natural gas prices, which normally influence the price action of natural gas futures at this time of the year.
Undoubtedly, the European Union purchases a major chunk of natural gas from the U.S. at this time of year, but this time, they have sufficient stock of natural gas to meet their heating demand.
Secondly, the mild weather may further lessen these demand phenomena amid growing concern that increasing tariffs if they don’t purchase gas and oil from the U.S. could keep the gas and oil prices on the lower side.
The impact of this new factor is clearly visible on gas and oil prices as the weather forecasts show that temperatures could turn milder across northwest Europe next week, which could provide some relief to the sharp inventory withdrawals ahead.
Technical Analysis: Key Levels to Watch
On the weekly chart, natural gas futures are near the major resistance at 200 DMA at $3.859 after the formation of a bullish crossover by the 9 DMA and 20 DMA crossing above the 100 DMA at $2.500 which seems to be a significant support.
Despite peeping above the immediate support at $3.556, natural gas futures look teetering at a crucial point that could generate a selling spree any time amid fear of demand and supply mismatch after the impact of this statement by the U.S. Incoming President Donald Trump.
In case of a sharp decline amid changing geo-politics, after the joining of U.S. President Donald Trump on Jan. 20, 2025, first support for the natural gas futures will be at the 9 DMA at $3.023 followed by second support at 20 DMA at $2.680 and the third support at 50 DMA at $2.838.
On the daily chart, natural gas futures are facing stiff resistance at the current levels as the last four trading sessions have pushed the natural gas futures from the lows at 3.093 to such highs in a short span that might generate a sharp selling spree in today’s session.
Undoubtedly, Friday’s closing level will define the further directional move for the natural gas futures during the next week.
In the 4 Hr. chart, natural gas futures are showing a bullish pattern since the 9 DMA, 20 DMA and 50 DMA have formed a bullish crossover by crossing above the 100 DMA, but the natural gas futures are facing stiff resistance after testing the day’s high at $3.652 indicating a surge in intensiveness among the traders as this levels might be an overbought territory for the natural gas futures.
Conclusion: If the natural gas futures find a breakdown below the 9 DMA in today’s session, the fall could be steeper and may continue during the last week of this year.
Disclaimer: Readers are requested to create any position in natural gas at their own risk as this analysis is purely based on the observations.