Natural Gas Weekly Price Outlook – Natural Gas Has a Tough Week

Natural Gas Weekly Technical Analysis

The natural gas market initially surged this week, breaking fairly strong above the $4.50 level, but as we are closing out the week we have turned around quite significantly. It does look like we are in the midst of some type of topping pattern, which makes perfect sense considering the time of year. After all, demand should start dropping rather significantly. And quite frankly, I think the main reason we are still up in these higher levels is that the winter was cold enough to take a lot of supply out of storage. That will be a temporary thing. And it’s only a matter of time before drilling refills the supply. And therefore, I think that’s the beginning of the end of the rally.

This is a trade that we see every year as natural gas prices start to really pick up in the autumn. But as we go through winter and start to get close to spring, you will see natural gas start to roll over and fall off. Because of this, I have no interest in trying to buy this market. And I do think that shorting the market is the only way to go right now.

That doesn’t mean that it won’t be extraordinarily volatile. It just means that I’m only looking in one direction. Breaking it cleanly below the $4 level would be a significant step in that direction. But I also recognize that there is a lot of noise between here and what could be the longer term target of about $2.50. If you are a longer-term trader, this could be a setup worth watching.

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