Natural Gas Price Outlook – Natural Gas Continues to Look Tired

Natural Gas Technical Analysis

The natural gas market has gapped lower to show signs of negativity and then dropped even further. Natural gas is a market that I’m looking very closely at right now because we do have to pay close attention to the fact that we are getting fairly close to the end of the high demand season. And therefore, it’s only a matter of time before we plunge.

There are some questions about Europe importing US natural gas, but quite frankly, I think that won’t be as big of a deal now that we are getting fairly close to decent storage in the EU. And the other thing that people had been so excited about, a depleted inventory in the United States will get filled at these high prices pretty quickly.

It was colder than a typical winter in the US, but it wasn’t apocalyptic. And therefore, I think the reaction is probably a little overdone. Once we revert to the mean, this could drop pretty drastically. And that’s the trade that I set up this time of year every year, just like in late autumn, I started buying natural gas because it’s going to go up due to demand.

This is not a massive position for me, but I do recognize that the market is one that could offer a cyclical trade and it can run pretty quickly to the downside if and when the market gets a grasp on the fact that demand is going to fall through the floor. This week in the United States is very warm. It’s very spring-like. A couple more of these weeks, you’ll see this plunge.

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