Natural Gas Markets Continue the Correction

Natural Gas Technical Analysis

Natural gas markets have fallen during the trading session on Wednesday, as we had gotten far too parabolic. We have now broken down below the bottom of the Tuesday reversal candle, which typically means that you are going to go further to the downside. That being said, the $6.50 level is an area that you will have to pay close attention to. At this point, natural gas is far overbought, and quite frankly the fundamentals do not line up with what we have seen as of late.

Even if the European Union decides to spend all of its natural gas budgets on US LNG, there is a major problem here. The biggest problem is that the United States does not have enough capacity to ship LNG in any greater capacity than it already does. On the other side of the Atlantic Ocean, the Europeans have no way to “re-gasify” any more natural gas than they do already. In other words, Europe desperately needs Russian natural gas, and therefore they will eventually capitulate.

The alternative might be to use crude oil for power, but quite frankly between this problem, the fact that the market is overbought, to begin with, and then of course the fact that temperatures are going to start getting warmer. Demand will drop either way and of course one of the best solutions to higher prices is simply higher prices.

Once it becomes less affordable, demand will drop either way. All things being equal, the market is going to continue to be very noisy, but if we break down below the $6.50 level, we could see even more acceleration. On the other hand, if we see support at the $6.50 level, it might be a continuation play.

Natural Gas Price Forecast Video 21.04.22

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