On Friday, there is increasing fatigue among market players following remarks made by U.S. President-elect Donald Trump.
Trump asserted that the European Union must purchase U.S. oil and gas to address its “tremendous deficit” with the world’s largest economy, or else face potential tariffs.
This statement resonates with natural gas traders who may be uncertain about how various factors typically affect natural gas prices at this time of year.
While it’s true that the EU imports a significant amount of natural gas from the U.S. at this time, they currently possess adequate stockpiles to meet their heating needs.
Furthermore, the mild weather may contribute to a reduction in demand, raising concerns that potential tariffs could keep gas and oil prices lower if they do not comply with U.S. import requests.
This new dynamic is influencing gas and oil prices, particularly as forecasts indicate milder temperatures across northwest Europe next week, potentially alleviating the sharp inventory withdrawals anticipated.
Technical Analysis: Key Levels to Watch
According to the weekly chart, natural gas futures are approaching a major resistance level at the 200 DMA, currently at $3.859. A bullish crossover has occurred, with the 9 DMA and 20 DMA rising above the 100 DMA, which acts as significant support at $2.500.
Although natural gas futures have briefly exceeded the immediate support level of $3.556, they are at a pivotal point where a sell-off could occur anytime due to fears of a supply-demand imbalance stemming from Trump’s statements.
In the event of a significant decline influenced by geopolitical changes after Trump’s inauguration on January 20, 2025, the first support level for natural gas futures would be the 9 DMA at $3.023, followed by the 20 DMA at $2.680, and the 50 DMA at $2.838.
The daily chart reveals that natural gas futures are encountering strong resistance at current levels, as the combination of the last four trading days has propelled prices from a low of $3.093 to recent highs—potentially triggering a notable sell-off in today’s session.
It is crucial to note that the closing price on Friday will be significant for determining the direction of natural gas futures in the upcoming week.
On the 4-hour chart, a bullish pattern is evident as the 9 DMA, 20 DMA, and 50 DMA have formed a bullish crossover above the 100 DMA. However, natural gas futures face considerable resistance after hitting a daily high of $3.652, indicating heightened trading activity—suggesting that this level may be nearing an overbought condition.
Conclusion: Should natural gas futures break below the 9 DMA in today’s session, a further decline may ensue, potentially continuing into the last week of the year.
Disclaimer: Readers are advised to make any trading decisions regarding natural gas at their own risk, as this analysis is based solely on observed trends.
