Natural Gas Price Outlook – Natural Gas Continues to Be Volatile

Natural Gas Technical Analysis

The natural gas markets fell to kick off the trading session on Friday, as we continue to see a lot of noise right around the $4 level. Natural gas is going to be an interesting place to be at the moment due to the fact that there is a polar vortex heading towards the United States and the Europeans, of course, have decided to import U.S. natural gas instead of getting natural gas from their own continent. So that does drive up the price over the longer term.

At this point in time, I suspect that short-term pullbacks are going to end up being buying opportunities that traders are more than willing to take advantage of. However, you also have to keep in mind that this is a very cyclical market, which means that once the cold weather leaves the northern part of the United States and Europe, the demand will crater. I also recognize that economies around the world are slowing down, so the demand for electricity from natural gas might drop as well.

I don’t necessarily think that you should short this market, but what I am saying is that there might be another rally or two after a short-term pullback that we can take advantage of for the season. And then after that, we have to reset our expectations and look at transmission rates, lines in the United States, demand from Europe, shipping, et cetera. So, it all gets a little bit more complicated instead of just simply trading on the fact that it’s cold. Short-term pullbacks end up being short-term buying opportunities.

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