Natural Gas Price Outlook – Natural Gas Continues to See Buyers

Natural Gas Technical Analysis

The natural gas market has gapped higher to kick off the trading week on Monday, as we continue to see plenty of upward pressure in natural gas despite the fact that typically this time of year that’s not how the game is played. Nonetheless, I think we’ve got a situation where we have a lot of noise and a lot of trouble at this point for buyers. I think the upside is somewhat limited, although clearly, I got stopped out this morning.

And that’s just how it is this time of year. It gets very noisy. It’s probably going to get a little colder here for a minute and then demand will pick up in America and then it’ll fall off again. So that’s what makes natural gas so difficult to trade as it’s based mainly on weather, which of course this time of year is very volatile. So, it makes the natural gas market volatile.

And when I say weather, I mean weather in the Northeastern part of the United States, and you’re up to a lesser extent really nowhere else. Nobody else consumes as much, at least as far as this contract is concerned. Remember, this is out of Louisiana. This is a US contract that you’re looking at. If we turn around and fall below the $4 level, I think that’s very negative. On the other hand, if we do continue to rally from here, think the $4.50 level will continue to be a bit of a ceiling. I think a lot of back and forth choppiness is what you can expect. I’d be very cautious with position sizing if you chose to trade natural gas at all. I still favor the downside over the next couple of months, but it’s still fighting tooth and nail to keep from falling.

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