Natural Gas Price Outlook – Natural Gas Continues to Discovery Gravity

Natural Gas Technical Analysis

The natural gas market initially did try to rally a little bit during the early hours on Tuesday, but gravity came back into the picture, and it looks like we may very well drop from here. Dropping from here does make a certain amount of sense because the gap has to be filled sooner or later, would be my guess, and that could drive prices down another 5 to 6% pretty quickly. With that being the case and the fact that it is the end of the year, I think liquidity is also an issue.

And in fact, I would postulate that the massive move on Monday was probably due to the fact that liquidity would have been lower than usual. So, it took less to move the price based on the Arctic blast that is expected to cover most of the United States in the next week or two. And of course, the fact that the Russian gas flowing through Ukraine is possibly never going to make it to the EU again. And that of course is something that rattled the market. And I think the combination of the two caught the markets off guard. And with fewer participants than usual, we saw an outsized reaction to the momentum.

So, with this, I think a pullback makes sense. I think you’re still looking at buying pullbacks. But what you want to see is the market come back to you bounce a little bit and then follow we’re still in the height of the busy season for natural gas but remember your spot natural gas CFD actually follows some type of pricing mechanism via the futures. It’ll either be the front month or it’ll be an average price of a couple of different months.

So that means the fact that futures are looking out into the future shuts down the natural gas winter rally quicker than most retail traders expect. We’re not there yet. But by the end of January, most futures traders are paying attention to spring, which obviously has less demand.

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