Natural Gas Forecast – High US Storage Is Keeping Gas Prices Trapped Below $3

Natural Gas Technical Analysis

The natural gas market has gapped ever so slightly lower during the open here on Thursday as we continue to see a lot of back-and-forth action, and it does make a certain amount of sense considering that the natural gas market is very seasonal. This time of year is typically fairly poor for natural gas as, despite the fact that there is demand from overseas, the reality is that there isn’t much in the way of demand in the United States, at least not beyond the norm. The massive amount of natural gas storage being full in the United States also works against this. This is a structural problem this time of year, and is quite typical.

Seasonal Demand Shift and Overhead Ceiling

Now, as we go into the colder months, that makes a big difference, and quite often we’ll send the market higher as supplies dwindle. We are looking at the October contract at the end of the month. We start to think about possibly seeing a little bit of colder temperatures, but really what we need is more drawdown of that massive amount of supply, and unfortunately, it just isn’t quite happening yet for the bulls.

Because of this, I’m looking at the $3 level as a potential ceiling in the short term. We’ll see, but longer term, once we get into the winter, it generally does much better. In that time of year, I become much more bullish in this market, but we aren’t there yet. As we roll over to the October contract, we are at least starting to think about a change in patterns.

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