Natural Gas Price Outlook – Natural Gas Continues to Look Sick

Natural Gas Technical Analysis

The natural gas markets have rallied slightly during the trading session and the early hours of Thursday, but still, we see a lot of lack of interest. We have switched over to the March contract and that is going to have a lot to do with where we go next. Quite frankly, now that you’re in the March contract, you’re starting to think about spring. And yes, I realize it’s just now turning February, but it is a futures market. And your CFD contract that you might be trading will be following this one way or another. Sometimes it is the average price, sometimes it’s just the front month, which would be this month, March, or other times it is halfway between two contracts. You just never know what you’re getting with the CFD.

So, with that, we look at the futures market and it tells us that things are going lower. That makes sense as it is expected to be warmer than usual in the month of March in North America and by extension, somewhat the same in Europe, and if that’s going to be the case, demand for natural gas is going to fall off of a cliff. This happens every year, there’s nothing particularly unique about this, it’s just that it might be happening a little earlier than usual. So, as things stand right now, I like the idea of fading rallies, assuming we get one. Any bounce for a couple of days that shows a long wick on top of it, I’m more than willing to start shorting.

I think we’ve made our flip from bullish season to end of the bullish season. Natural gas, of course, is a very difficult contract to trade because unless you were in tune with transmission rates of pipelines in the United States, storage, demand coming from Europe, that’s not as high as it once was due to storage in Europe, and then of course, the weather in the Northeastern part of the United States, you’re at a huge disadvantage. So, keep all of that in mind.

The cyclical trade is one that’s somewhat reliable though. So that’s why I play it every year. It normally adds about three to 4% to my account as I close out the books. You know, it’s not a huge part of my trading year, but it is a part of my trading year. We are starting to get out of that phase, and now natural gas will end up eventually falling and becoming range-bound again.

For a look at all of today’s economic events, check out our economic calendar.