Natural Gas Price Outlook – Natural Gas Continues to Look Tired

Natural Gas Technical Analysis

The natural gas market has gone back and forth during the early hours on Friday as we’re just hanging around the $4 level. The $4 level of course is a large, round psychologically significant figure that a lot of people will be paying close attention to. That being said, if we do break down from here, and more specifically break down below the lows of the Thursday session, we could very well drop to the 50 day EMA, which is currently hanging at about the $3.84 level. Anything under there could open up a move down to the $3.50 level.

Short-term rallies are probably going to continue to be sold into as temperatures in the United States and Europe are both climbing and therefore demand should drop. Despite the fact that there are a lot of concerns about whether or not Russian gas will be able to make it to the European Union. And of course, there are concerns about the fact that we had so much in the way of cold temperatures this winter that we have taken quite a bit out of storage.

That being said, if demand drops and the drillers are still out there producing natural gas, it’s only a matter of time before that disappears. This is a cyclical trade that I like a lot, shorting natural gas right before we start to see warmer temperatures or as we see warmer temperatures in order to take advantage of a pretty significant drop that tends to happen at this time of year.

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