Natural Gas Price Outlook – Can Natural Gas Turn Things Around?

Natural Gas Technical Analysis

The natural gas markets dropped about 5% in the early hours on Friday, as it looks like we are coming back down from that explosive move to the upside. In general, I think this is a situation where you have to look at this through the prism of whether or not you are finding value. After all, the market is now right at the bottom of that gap from the beginning of the week, so it’ll be interesting to see if this holds. In fact, this is exactly where a lot of people would be jumping into the market, so only time will tell.

Colder temperatures in the United States, of course, have a major influence on natural gas and we are certainly seeing them. We get an Arctic blast over the next couple of weeks and that will drive up demand. We may actually just now be in the peak season as it were for use. That being said, keep in mind that futures markets drive where the spot natural gas CFD trades and therefore, it’ll be interesting to see how this plays out.

Sooner or later, traders are going to be paying attention to things like March and April. And when we get to that point, demand plummets. So I do think, and have said for a couple of days now, that we get another pullback and another shot higher. And then after that, you’re probably maybe good for one more. And then after that, it’s probably over. I think this is my last hurrah for the winter.

But as things stand right now, it certainly looks like this gap is trying to hold in the short term. If we break down from here, the $3.40 level has quite a bit of market memory built into it as well. So I would be very interested in buying in that area on the bounce.

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