Natural Gas Price Analysis – Natural Gas Continues to Look at Warmer Temps Coming

Natural gas continues to look for the floor, as weather patterns look warm going into the back half of February.

Natural Gas Futures

Natural gas markets continue to peter around the $3.35 level as we just don’t have much in the way of momentum. The $3 level is probably the floor as this time of year has a certain amount of demand, and certainly there’s a lot of cold weather in the United States at the moment.

That being said, we are expecting to see warmer than usual temperatures in the United States, especially the western half of the country. They’re talking about 30 °F warmer than normal for this time of year; that will make natural gas demand plunge.

A Potential Shift in Winter Demand

The eastern part of the country of course is still cold, but even the eastern part is expected to see a shift in the arctic air being trapped up in Canada, and therefore the demand in the United States should start dropping. The market is probably going to continue to look at the possibility that the supply crunch that people had worried about a few months back may be just fantasy.

Quite frankly, if we get a very mild exit to winter — and so far winter has been pretty rough — that leaves a lot in storage tanks. So, we may be in a situation where, and I still believe we’ll get another pop between now and the end of winter, but I think we’ve seen the highs so far. I don’t see us getting back to $7. I just don’t.

That obviously could change with the right weather pattern, but right now we are really 2 months away from natural gas demand completely collapsing, which means the next contract will be when that happens and we roll over into April on the 25th of February.

So, it’s got to happen soon or it’s not going to happen at all. Now that’s not to say that it can’t rise; I just don’t think we’ll get these meteoric rises that we’ve seen. I am not ready to start shorting yet. I want it to bounce again before I do that, and then I start shorting into the spring and early summer months.