Natural Gas Price Outlook – Natural Gas Continues to Consolidate

Natural Gas Technical Analysis

The natural gas markets have been somewhat quiet during the early hours on Wednesday as we continue to hang around after that recent pullback. All things being equal, this is a market that is still watching the weather closely in America, which has been brutally cold, but at the same time, you have to keep in mind that the futures market is getting ready to roll over into the March contract, and that means we’re going to start thinking about spring sooner rather than later. While the cold is rather tough here in the U.S. at the moment, the reality is that we are going to see more seasonal temperatures next week.

So, I think that puts a little bit of overhead pressure on the market right now. Furthermore, we have a lot of questions to ask about where the sustainability of the rally is coming from. There are questions as to whether or not the Europeans will continue to have to buy crude oil and natural gas from the United States due to the sanctions and that of course, has a major influence on the natural gas market itself. But really, at this point, it’s a big mess in Europe and that is probably the one thing that’s keeping this market somewhat afloat. Yes, the cold temperatures help, but that’s a very short term thing.

The United States might have some well head freezing, which could cause issues as well. But these are all temporary things and this is why I think if we get another shot higher, it’s probably a short-term trade. And I think at this point, the $3.50 level is what you need to watch because it should be support and it does have the 50-day EMA sitting underneath it, backing it up. To the upside, we could go as high as $5 on a big shot higher. But at that point in time, I think you’d probably be talking about the end of the winter cycle.

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