Natural Gas Price Analysis – Cold Snap in the US Continues to Send Gas Roaring Higher

Natural Gas (NG) Technical Analysis

The natural gas market has gapped higher on Monday after the massive snowstorm hit the United States over the last couple of days. There are a lot of problems in the Deep South, an area that generally doesn’t deal with snow and ice, so that of course has caused a major acceleration in the demand for natural gas as opposed to places where you would expect like Cleveland, Buffalo, or New York City.

So, with that being said, we did get a massive shot higher, but it’s probably worth noting that we are already starting to sell off pretty quickly. I think this will be interesting to watch because there is cold weather expected. I think there’s still a reason to buy natural gas; I just don’t know that I like chasing it all the way up here.

The natural gas market has the nickname “the Widowmaker” for a reason, and it’s moves like this. If we do pull back from here, the $5.00 level should be massive support, but we might even see support at the $5.50 level as well.

Market Volatility and Weather Forecasts

The target, I think, is $6.50, but all it would take is a correction in the weather forecast and the next thing you know we could see is this thing drop $2.00. Be aware of that; it’s a very dangerous market. That being said, as cold as it is, they cannot drill in a lot of places and that’s exacerbating the move to the upside.

That’s generally something that works itself out in a couple of weeks either way. I had said previously that I thought there would be another major jump or two in the winter. That still is my thesis. We’ll probably fall from here at one point or another and get another cold snap and jump again. That’s generally the pattern for wintertime trading.

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