Natural Gas Price Outlook – Natural Gas Continues to See Noisy Trading

Natural Gas Technical Analysis

The natural gas markets have gapped lower to show signs of weakness on Monday, but you also have to keep in mind that Monday was Martin Luther King Jr. holiday in the United States. So, it makes a certain amount of sense that we would see the markets lack a little bit of volume, and it’s also worth noting that the futures markets were only open for part of the session. So, with this being said, I think you have to look at this as a market that is going to remain buy on the dip, perhaps with $3.50 cents underneath as a bit of a floor.

Either way, I think you have to understand that we are in the middle of the high season, as it were, with natural gas demand picking up. But I also recognize that you have a situation where futures traders are going to be rolling over in just about a week’s time into the March contract. So, with that, before you know it, we’ll start looking at warmer temperatures influencing the direction of the market.

We do have a couple of very cold days in the United States ahead of us, but by the weekend we’ll be back up to above freezing, so although it’ll be cold, it won’t be outrageously cold by then and therefore I think you’re probably looking at more chop in the short term than anything else. I do think that buying the dip will probably continue to work at least for a little while, but once we start getting deeper into the March contract, that’s when you really have to ask questions as to the sustainability.

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