Natural Gas Price Forecast – Natural Gas Continues to Look For The Floor

Natural Gas Technical Analysis

The Natural Gas markets have stabilized a bit at this point, and it looks to me like the market is trying to do everything it can to find the area around the $2 level to be supportive. I do think eventually it is. The question is whether or not that’s today. I think you have plenty of time. Quite frankly, this is a market that you should not have a lot of leverage in, and therefore you should look at it through the prism of an investment like I do.

It’s just simply too noisy. In order to effectively trade natural gas day to day, you need to understand the weather patterns in the northeastern part of the United States, the weather patterns in the Gulf of Mexico, and whether or not it will disrupt production, transmission rates through the natural gas lines in the United States, as it is shipped from one place to the other, demand, of course, and storage capacity. Once you have all of that together, then you have to focus on things like, what’s the employment situation? Will there be more electrical demand, that type of thing. So, because of this, I think it’s best to trade it as a cyclical asset.

And what that means is that during the summertime, typically it’s pretty weak, although we did recently see a spike higher due to a massive heat wave. Well, that’s come and gone. So, at this point, the next major spike will, unless there is a massive heat wave again, probably be the fall season when Americans start to heat their homes with natural gas again. Remember, this is an American contract you are trading. It’s not European.

Joe Biden signed an executive order not too awfully long ago in the last couple of years, which bans quite a bit of exporting of liquefied natural gas, not all, but quite a bit. So that’s why Europeans don’t get as much relief from the United States as you would expect. That is expected to be lifted into Donald Trump administration. And if that’s the case, it will massively change the dynamics of this market.

But as things stand right now, it is almost solely a domestic market. So, by all means, keep an eye on the US if you want to know what’s going on here. I use it as something to trade cyclically via ETF. If you don’t have the ability to trade an ETF, a very small CFD swing position is possible here, obviously to the upside, but you have to be willing to just let it go. It’s going to have to last probably a couple months to realize its full potential.

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