Natural Gas: Fed Decision Likely to Spark Wild Swings Before Inventory Data

Movements of natural gas futures since April 20, 2023, have been volatile as they attempt to fill the gap created after hitting a low of $2.143.

Natgas futures hit a recent high at $2.561 on Apr. 28 before retreating to the levels where they found support during the third week of Apr. 2023.

On May 3, 2023, Fed’s decision could affect global markets, including commodities, especially energy and precious metals.

Undoubtedly, demand-supply dynamics and weather conditions determine natural gas prices, but the directional move of US dollar index also impacts futures' price moves.

Upcoming weekly inventory announcements on May 4 are likely to favor bears as this week’s EIA report, with expectations for a build of +86 Bcf, could generate fresh selling if the natural gas futures try to sustain above the immediate resistance at $2.408.

Natural Gas Futures 1 Hr. Chart

Technically, in the 1-hour chart, natural gas futures are trading in bearish mode on May 3, as traders still remain uncertain about the further direction of natgas prices as immediate support is at $2.186, while the second significant support is at $2.134, from where a rebound is likely.

On the other hand, if futures hold above significant resistance at 200 DMA at $2.329 could push to retest the next stiff resistance at $2.588 before week’s close.

Continued wild price swings could push natgas futures to retest the recent lows at $1.948, tested on Apr. 14, 2023, if they break below the immediate support at $2.143.

Natural gas futures could attempt to move upward till the Fed’s final interest rate decision tonight, as they are holding above a bullish crossover in 1-Hr. chart. Big bulls could eye $2.484 as their immediate target amid a surge in wild price swings.

On the lower side, immediate support at $2.134 could provide an opportunity to go long in today’s session, as fresh buying is likely to be seen at this level.

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.