Natural Gas Price Outlook – Natural Gas Continues to Focus on Supply

Natural Gas Technical Analysis

The natural gas markets have rallied pretty significantly during the early hours on Monday as there was discussion about whether or not Europe would be able to get natural gas from Russia, even though there is a war and they are on opposite sides of that war. But I digress. So, the theory, of course, is that despite the fact that the demand in the United States is going to pretty much fall off of a cliff here in the next few weeks, there are a couple of things pushing natural gas prices higher. Number one, of course, is the idea that maybe Europe will have to rely on US exports and number two, of course, is the idea that the winter was bad enough that it withdrew a lot more natural gas than we’ve seen over the last several years.

Both of these are true, but at the end of the day, this is more or less a knockout effect on what’s going on in the European Union region. If they do in fact, get some type of discussion with the Russians to get natural gas, which appears to be a very real possibility, that will take that piece off the table. In other words, this spike may be short-lived, as we saw during the day on Monday, we’ll just have to wait and see. And again, this is the time of year when you start to see prices crumble and it has lasted a little longer than usual, but I don’t like the idea of chasing natural gas on the way here.

Under normal circumstances, if you had told me natural gas was trading at $4.62 in the middle of March, I would have been probably somebody who would ask you, are we in a war? Well, it turns out we are and it turns out that the sides fighting each other, although one be a proxy, are still doing business. So, there you go.

I do think eventually we will sell off quite drastically. Like I said, I’ve been on the sidelines for a while now. I’m just waiting for the signal. I just haven’t had it. There’s been a couple of attempts at breaking natural gas down. We just haven’t seen it successful yet, but to come in and buy after this type of move, especially those who got in at $4.88, later in the same day, they’re getting exactly what they deserve for chasing.

Again, when you look at this from a historical standpoint, this is a pretty extended move, and therefore, I think you have to probably look at this through the prism of a market that’s just really stretching into an area that could cause a lot of resistance. But we’ll just have to wait and see. I prefer shorting. I just don’t have the price action to confirm that. So, I’m on the sidelines.

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