Natural Gas Price Outlook – Natural Gas Continues to Rise Despite Warmer Temperatures

Natural Gas Technical Analysis

The natural gas markets initially did look like they were trying to slump again and then turned around to rally rather significantly. That’s not a huge surprise, considering that there are reports that the US natural gas reserves are down about 12% from where they normally are this time of year. And therefore, I think people are trying to thread the needle here due to the idea that there is going to be buying of natural gas between now and the warmer temperatures that are coming in a couple of weeks. That being said, if you remember over the last couple of weeks, I’ve been talking about how the market will sell off as we start to roll over into later contracts, you see natural gas demand and of course price drop.

Now, having said that, I also said that quite often you get it wrong a couple of times before you get it really, really right. And that’s the play here. And it is difficult because we could get the occasional cold blast between now and the end of winter, but we are just a few weeks from the actual official start of spring. And the clocks move forward in about five days in the United States. So that has an effect on energy consumption as well. So, I do think the sell off is coming. It is interesting to notice that we did race right back up to the $4.40 level where we are currently hesitating. That’s where we form that little bit of a double top.

If we do break out to the upside, then so be it. I’ll just short it from a higher level. I’m under no illusion that natural gas is going to stay elevated when temperatures in places like New York are 71 degrees. For you Europeans, I think that’s about 20 Celsius, give or take. It’s just not necessary for heating or cooling, and that is about to happen. So, with that, I think you will see more of this volatility, but ultimately, I’m still looking for a breakdown. I’m not convinced enough to put money to work right here, but it is a market that I’m watching.

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