Natural Gas Forecast – Heavy U.S. Supply Crushes Upward Momentum

Natural Gas Technical Analysis

The natural gas market has drifted a little bit lower in early trading on Thursday as we are trying to figure out where to go next. Ultimately, this is a market that remains somewhat hesitant to take off to the upside, and that makes a certain amount of sense. After all, the supply is pretty heavy in the United States, and it would take something rather significant to get this market moving. If the market were to turn around and rally from here, then it’s going to be fighting an uphill battle this time of year.

Now, having said that, it doesn’t necessarily mean that we cannot rally, and it doesn’t necessarily mean that traders won’t be okay to buy this at times, but these are going to be short-lived rallies, historically speaking, this time of year due to the lack of demand.

Heavy U.S. Supply Suppresses Seasonal Momentum

The situation in the Middle East could make things interesting in a few months, and the Qatari suppliers are starting to buy from the US, so that could have an effect here as well, because they do have to provide natural gas for the contracts they’ve sold in Europe. This rides on a lot of what-ifs, unfortunately, so I think most traders right now are just trading the season, and it’s pretty mild this year.

We are trading the September contract, so here in a few weeks we’ll roll over into October, and you’ll start to think about late fall at that point and maybe heating in the United States. That provides a little bit of a boost, but the supply right now is so strong that it crushes most upward momentum.

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