Natural Gas Price Outlook – Natural Gas Continues to Look for the Floor

Natural Gas Technical Analysis

The natural gas market has dropped pretty significantly in the early hours only to turn around and hang on to the 200 day EMA. This is a market that I think is in the process of trying to determine whether or not we are going to sell off into the warmer temperatures or if we’re going to hang on to the idea of exports heading to the European Union. Really at this point in time, I do think demand drops sooner or later. And one of the main drivers of natural gas over the last couple of years has been the idea of Russian natural gas maybe or maybe not heading into the European Union.

So, with that being the case, I think you have to watch that situation. But overall, I think we have a situation where if we break below the lows of the day here on Tuesday, then I think we drop to the $3 level pretty quickly. On the other hand, if we turn around and recapture $3.50, then I’ll be looking for signs of exhaustion above, maybe near the 50 day EMA. All things being equal, I don’t really have a lot of interest in buying any natural gas contracts at the moment. This time of year, is typically pretty poor for natural gas.

I assume that will continue to be the case, although it’s a bit noisier this year, needless to say, but over the longer term, this correlation with warmer temperatures and lower demand typically comes into the picture somewhere right around this time of year until we get closer to like October. So, I’m bearish. I’m looking for signs of exhaustion after rallies or a break of the daily low to start shorting again.

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