Natural Gas Price Analysis – Natural Gas Bounce into the Weekend

Natural Gas Technical Analysis

The natural gas market has rallied a bit after initially gapping lower on Friday, as it appears there are talks now of potential ground troops seizing islands in the Straits of Hormuz. The ceasefire that we have recently seen has, of course, helped calm the situation, but at this moment, it also looks like Iranian hardliners are ramping up the call to get nuclear weapons.

That suggests that it is going to continue to be a situation where there is just no give or take going forward. In this environment, one has to assume that sooner or later, the world has to come to some type of resolution here, but there are going to be fuel shortages around the world in various parts.

US Seasonal Demand and Infrastructure

This is a US-based contract. So, with that, one would have to assume that sooner or later, that comes back into the picture and people begin to think about the idea that this is mainly driven by weather in places like Boston, Philadelphia, and New York City. It is not so much driven by much else most of the year.

As we are entering a warmer time of year, US gas or Henry Hub natural gas will be in less demand. The real question is going to be looking forward 6 months from now, when people are starting to talk about European demand. There will be an increase in exports from Louisiana, which would be my guess at this point, because there is a certain amount of infrastructure that has been destroyed in the Middle East.

But I would also point out we are at a technically sound support level, so it all lines up anyway. Short-term rallies are possible, and quite frankly, I think it would be expected. That being said, I also look at these rallies as nice opportunities to fade as soon as we see signs of exhaustion, especially near the 50-day EMA.

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