Natural Gas Price Forecast – Natural Gas Continues to Try to Recover

Natural Gas Technical Analysis

Natural gas markets have probed a little bit higher during the early hours on Wednesday, but I do think that we are getting a bit stretched at this point. However, on a short-term pullback, we will have to wait and see whether or not $2 holds, or if we get a deeper correction.

We are most certainly in a buy on the dip scenario now, but you also have to keep in mind that this is a market that I don’t trade with leverage because quite frankly, it is a situation where we’ve gotten so cheap that it does make sense to own natural gas, but you don’t know the timing. This time of year, is typically not very strong. And with that being the case, the upside is probably somewhat limited. However, you may get a heat wave or something like that in the next month or two that you could sell your ETF position in.

If you are looking to get levered into this, then the upside is probably the right way, but you don’t necessarily chase it. You also recognize that there isn’t a lot of runway to the upside in the short term. I think if you can find value, you should take advantage of it, because natural gas will eventually have to restabilize and take off to the upside to price and geopolitical issues, demand, that type of thing.

Demand is lower this time of year, but it’s not non-existent, and that’s what the market’s had priced in. Oversupply has been an issue, but that is starting to get worked through, and the longer the market drops down to the bottom that we’ve seen recently, the more likely you have driller just simply walk away. So that’s an issue as well.

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