Natural Gas Price Outlook – Natural Gas Continues to Look Tired

Natural Gas Technical Analysis

The natural gas markets have rallied a bit in the early hours on Tuesday but continue to see the $4 level as a barrier that’s going to be difficult to overcome. If we do break above the $4 level, then we could go looking to the $4.25 level, but we’ll see. It’s been three days in a row that we just couldn’t hang on to anything above there. Just below current trading, we have the 50 day EMA, and that of course will attract a certain amount of attention as well and could send the market much lower if we break below it. In fact, that’s essentially what I’m thinking could happen.

All things being equal, this is a time of year when the natural gas market will typically sell off due to the fact that heating demand is drop, after all, temperatures are climbing in the United States and therefore markets see a lot less drawdown. Furthermore, storage will be refilled after that brutal winter and that is part of the reason why natural gas is still a little higher than it typically is this time of year because we have burned through so much natural gas.

It’ll be interesting to see how this plays out because there is the wild card of exporting to Europe, but they will need less natural gas as well, as they are also in the Northern Hemisphere. So, I think most things point to a lower market. It’s going to be very noisy; it’s going to be very choppy, but I still favor the downside at this point, perhaps down to the $3.50 level. If we can break down below there, we could go much lower.

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