Natural Gas Forecast: Seasonal Bottom Forms as October Nears

Natural Gas Technical Analysis

The natural gas market has been very choppy during trading on Monday as we get back to work right around the 50-day EMA. The energy situation in the United States is one that has a massive amount of natural gas in storage, so it’s not a huge surprise to see that the market may be struggling to really assert dominance to the upside.

But we are now in the October contract, so we’re at least in the neighborhood of the possibility of temperatures dropping enough to get things going in favor of higher pricing. This is when we start to think about it, but need validation.

Storage Overhang and Seasonal Demand Outlook

Ultimately, the market is one that needs to see some type of cold snap, and we’re not going to see that right now. It needs cold weather in the forecast, and October will be cooler. Generally speaking, the end of October is when we start to possibly turn the heat back on in the United States, and that’s the big driver of the price of natural gas.

There are some questions about the Europeans having to import liquefied natural gas out of America this winter. And if that ends up being a situation that comes to fruition, then it should have an influence on the natural gas prices going forward.

As things stand right now, we’re still in the bottoming-out phase of the seasonality depression that hits natural gas in the hot months most of the time. So with that, I’m cautious, fairly neutral here in this area, with no real strong conviction one way or the other.

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