- Natural Gas prices could strengthen further during 2023
- A steep fall during December 2022 pushed the natural gas futures into oversold territory
- Reversal from the lows of January 2023 will confirm a sharp uptrend during this month
Despite a gap-down start to the year, natural gas looks unlikely to slide further as the bulls sit at 200 DMA in the weekly chart.
Undoubtedly, the natural gas futures closed the last year with a wild price swing, which is likely to continue during this week as the warm weather from Dec. 27 – Jan.1 has exerted enough selling pressure to push the natural gas futures to the lowest point.
Natural gas futures showed the same moves at the end of 2021 as the natural gas futures hit a low at $3.536 during the last week of 2021 before the advent of a supper uptrend for the year 2022 in the first week of January from $3.637.
This time, the geo-political concerns amid growing recessionary fear could keep the uptrend intact in 2023.
I believe that demand for natural gas could surge once economic normalcy comes despite the resurgence of Covid-19 cases in China, which is one of the largest consumers of oil and gas.
Technical Speaks Loudly
In a monthly chart, the natural gas futures are trying to form a bottom at $3.956, ensuring a sharp reversal from the current levels.
In a weekly chart, the natural gas futures are trading inside the buying zone where the risk/reward ratio looks favor bulls to go long above 200 DMA.
I find that a sustainable move by the natural gas futures above $4.258 in today’s trading session will be the first indication of the big bulls’ entry into the scenario.
Undoubtedly, a breakout above the second resistance above $4.755 will confirm the advent of a bullish trend in 2023.
Political & Economic Issues
Since Russia invaded Ukraine, its economy has worsened by selling gas and oil to some Asian counties to defy the imposed sanctions by the Western countries as Russia wants to use natural gas and oil as a tool to empower the west.
Undoubtedly, this methodology could continue by creating a supply crunch of natural gas during this year to emphasize that western countries could keep the natural gas price higher during this year.
I believe that the growing efforts to influence the whole world, Russia, and the US could disrupt the smooth supply of gas and oil to other countries during this year.
Conclusion
Finally, I conclude that if the natural gas futures start reversal on the first trading session of 2023 from the day’s low and close in green will be an initial indicator of a sharp uptrend in 2023 that could beat the heights of 2022.
Disclaimer: The author of this analysis does not have any position in Natural Gas futures. Readers are requsted to place an order at their own risk, as Natural Gas is one of the most liquid commodities in the world.