Natural Gas Forecast: $2.80 Support Holds as Supply Weighs

Natural Gas Technical Analysis

The natural gas market gapped lower to kick off the Thursday trading session as we continue to see a lot of noise in general. Ultimately, this is a market sitting below the 50-day EMA, which obviously is bearish, but it is also a market that sees a lot of interest right here at the $2.80 level.

The $3 level above is a significant barrier for bulls to deal with. It is also a large, round, psychologically significant figure, so that is something to keep in mind as well.

This Time of Year Tends to Be a Little Bit Difficult for Natural Gas

We are not quite to the heating season, and the air conditioning season in the United States is starting to run out. Currently, natural gas sits about 5% over the 5-year average as far as storage is concerned.

Marrying up the lack of demand with the overcapacity that we see at the moment, it makes sense that natural gas might struggle a bit to really get going to the upside. That does not necessarily make you bearish, though. There is a floor here. Basically, what it does is keep the market in a bit of stasis as we are trying to determine which direction to break out of.

Longer term, I am looking for a move higher just based on cooling temperatures over the next couple of months, but we are just not quite in that season yet. Natural gas will obviously try to front-run any cold weather. The first weather forecasts that start talking about cold temperatures in the United States could be the beginning of the next move higher.

Keep an eye on temperatures in places like Boston, Philadelphia, New York, Cleveland, Columbus, and Pittsburgh to get an idea as to where natural gas may go. Exports of liquefied natural gas are up year over year, but it is still not enough to take down the massive supply.

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