Natural Gas Price Outlook – Natural Gas Continues to See Strength

Natural Gas Technical Analysis

The natural gas markets have gone back and forth during the early hours of Monday after initially gapping much higher. That being said, we are still looking at the $3.40 level as a major barrier, so it’ll be interesting to see if we can finally break out. If and when we do, it’s likely that the market will take off towards the $3.50 level.

A short-term pullback does make a certain amount of sense, although we did get that on Friday, to reach the $3.00 region. This would just be simple digestion of gains in a market that has been extraordinarily explosive to the upside over the last couple of weeks. Regardless, I do not want to short natural gas this time of year anyway, because of course, demand for natural gas will pick up in the United States given enough time, and that of course will drive pricing higher.

The market does tend to overreact to the weather. So as the northeastern part of the United States is finally getting cold weather, and there is snow now predicted in some weather reports, we’re starting to see the natural gas market wake back up. Again, I believe that short-term pullbacks will end up being buying opportunities more than anything else, and it’s probably worth noting that the volume has picked up just a bit.

Once we get a breakout, then again, I believe that the $3.50 level is the initial target, but we may go much higher than that. If we were to break down below the $3 level, then we’d have to see how things played out at that point.

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