Natural Gas Price Analysis – Natural Gas Continues to Drift Lower

Natural Gas Technical Analysis

Ultimately, natural gas rolled over, and we saw the June contract rise and then drop. A lot of that comes down to the mechanics of how futures markets behave and not that there was any real demand. So, with that being said, I think you continue to look at short-term rallies as opportunities to get short in a market that, quite frankly, is extraordinarily oversupplied at the moment, and I think probably continues to look like that for some time as the weather continues to be very comfortable in the US.

The $2.50 level is my target. If we did rally from here, I would be looking to short somewhere near the $2.90 level, maybe even the $3 level. Any signs of exhaustion should be jumped on from short sellers, as the demand for natural gas will not pick up until there is a heatwave in the summer.

Storage and Supply Dynamics

Keep in mind that this is a US-centric contract and with temperatures being relatively comfortable in the United States, there is no real concern that we are suddenly going to run out of supply. In fact, it is the exact opposite, as the US and Canada have so much of the commodity in the ground.

One of the biggest concerns we have for natural gas in the US is that we have enough storage. So, with that being the case, this is a very bearish market, and I just do not choose to fight that this time of year. I look for shorting opportunities, as I do this time of year, every year.

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