Natural Gas Price Outlook – Natural Gas Continues to Dance Around

Natural Gas Technical Analysis

The natural gas markets have gapped lower a little bit to kick off the trading session here on Tuesday, but really at this point in time I think you have to look at this through the prism of a market that is doing everything it can to sort out some type of bottom. I think that bottom is closer to the $3.50 level. So, while I wouldn’t necessarily short the market, I would be looking for some type of bounce from a lower level just to find value. It’s freezing in the United States right now. The windchill in Ohio is supposed to be negative 31 Celsius.

So, with that being said, there’s obviously a lot of natural gas being used, but we already know this and then by the weekend, it’s going to be somewhere around five Celsius, if my math is right. So, it’s a short-term thing. We are in the midst of winter and there will be more demand, but sooner or later we roll over and go into the contract switch from February to March.

So, what that means is, and over the next couple of weeks, we will start to see traders price in the idea of March and then April when demand will fall off of a cliff. So, there’s a real shot that we have another pullback in bounce. But after that, I’d be very leery about buying natural gas. It’s a cyclical market under most circumstances.

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