Natural Gas Price Outlook – Natural Gas Continues to Drift Lower

Natural Gas Technical Analysis

The natural gas market has initially tried to rally a bit during the session here on Wednesday, only to give back gains near the crucial $4 level. The $4 level, of course, is an area that people have been paying close attention to for some time, and, of course, we’ll have a lot of options traders watching it. The $4 level is an area that previously had been resistant and now it’s support, and now that we have broken through there, it should be resistance again. If we continue to drop from here, it’s likely that we could go looking to the $3.50 level.

The 50 day EMA is sitting right around where we are now. So, I think in general, we have a situation where the cyclical trade is starting to come back into play, where demand drops rather drastically as temperatures warm up in the United States. If that is in fact going to be the play here, I think we get to $3.50 much quicker than people anticipate.

I understand that the natural gas situation’s a little different than it is most years because we have drawn so much out of supply. But I do think the situation with natural gas in Europe coming from Russia will get sorted out before it’s all said and done because quite frankly, Europe doesn’t have a choice. And on top of that, to a lesser extent, neither does Russia. They will eventually get things together. It looks like the Ukrainian war might be winding down, which should be good for the distribution of natural gas as well. So, a lot of things are lining up right now to make this cyclical trade really start to kick off again.

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