Natural Gas Price Forecast – Natural Gas Continues to React to Weather

Natural Gas Technical Analysis

The natural gas markets have rallied again based on the idea that perhaps the weather in the Gulf of Mexico could shut down a bit of production. Furthermore, we also have to keep in mind that this time of year, you start to focus on colder temperatures in the United States. So, futures do tend to rise. At this point, the $3 level above is a large round psychologically significant figure and an area that I think a lot of potential options barriers may sit.

Keep in mind, the best way to play this market to begin with is to the long side right now, obviously, but you also have to be cautious about your leverage. Leverage in the natural gas markets can get you crushed because it is such a volatile asset. If we can break above the $3 level, then I look for the $3.10 level to be targeted next.

In general, this is a market that has plenty of things to push it higher, but I don’t necessarily think that it’s got a huge run ahead of it. When you look at longer term charts, you see that the $3 level has been crucial multiple times, and as we approach it, I would expect some type of pullback unless of course a hurricane or a tropical storm actually shuts down production in places like Louisiana.

Even if that were to happen, that would have a short-term effect. We would probably get some type of pullback that you could buy into heading into the winter, and then you collect your profit. Remember, I am long of natural gas via an ETF, and now we’re getting to the point where I may close out even more of my position and just take my profit and go home. As far as jumping in here and buying, I mean, it could work out, but it is a little late for that.

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