The movements of natural gas in April 2023 indicate that the price reversal is still intact. The havoc caused by the storms is likely to push natural gas prices upward due to fears of supply disruptions in the Gulf area. This fear is compounded by a lightning strike that sparked a fire at a natural gas pipeline in Corinth, Mississippi, early on Friday.
An apparent lightning strike during a storm ignited product at the Corinth Compressor Station on Kendrick Road around 12:50 a.m. causing a shutdown of the facility. This resulted in a sudden surge in natural gas futures from a negative 2% to a positive 7% Friday morning. The market pared gains to a positive 2% by Friday afternoon on expectations that the facility would return soon.
In my previous analysis on April 17, I explained the reasons behind the surging indecisiveness among traders and the impacts of the upcoming hurricane season, which typically begins on June 1. This sudden phobia strike among traders could keep the price trend in favor of the bulls in May 2023.
Technically, natural gas futures have formed a bullish candle in the monthly chart in April 2023, despite the emergence of selling sprees. In May 2023, natural gas futures are likely to repeat a large green candle as seen in September 2009 if the upcoming month starts with a gap-up opening at $2.703 and retests the low at $2.410 before a steep reversal.
In the weekly chart, natural gas futures hinted at this reversal during the last week of March 2023, with the formation of a bullish weekly hammer after hitting a low at $1.944 and a high at $2.246. Since then, natural gas futures have been holding above this weekly support, despite an attempt by the bears in the first week of April 2023.
A weekly close by the natural gas futures in the last week of April 2023, above the 9 DMA, could get confirmation with a breakout above the immediate resistance at the 18 DMA, which is at $2.895, during the first week of May 2023.
Disclaimer: The author of this analysis does not have any position in natural gas futures. Readers should take a trading position at their own risk, as natural gas is one of the most liquid commodities in the world.