Natural Gas Forecast: $3 Resistance Caps Upside as Supply Swells

Natural Gas Technical Analysis

The natural gas market has drifted a little bit lower in early Friday trading as we continue to see a lot of push and pull via weather and demand concerns, with massive supply.

Keep in mind that this is the so-called shoulder season in the United States. It really is not hot, and it really is not cold. Demand for natural gas does slip a bit. Despite the headlines about potential natural gas demand for electrical supply to data centers, quite frankly, we have a massive amount of natural gas in the United States right now in storage, 5% above the 5-year average.

LNG Purchases for EU Not Enough to Tighten U.S. Supply

The natural gas supply is still very ample in the United States. With that being said, this is still a market that struggles to go higher.

Having said all of that, this is the time of year when we start to think about colder weather. This is the October contract, so that is worth paying attention to. In a couple of weeks, we will be trading the November contract.

I think the downside is probably limited here. The upside is seemingly capped at the $3 level, an area that has been significant resistance and, of course, is a large, round, psychologically significant figure as well.

Ultimately, I am looking for range-bound trading, and I do believe that it is probably going to take something really special to get natural gas moving in any type of impulsive move. Short-term trading will continue to be the way I look at this.

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