Natural Gas Price Analysis – Natural Gas Continues to Slide

Natural Gas (NG) Technical Analysis

The natural gas market continues to be fairly negative as we have dropped again on Tuesday, reaching the $2.60 level, looking very much like a market that wants to reach the $2.50 level. This does make sense at this time of year. Natural gas demand is just falling apart as temperatures are warm. You do not have to worry about heating in the United States. In fact, they are unseasonably warm right now. As a result, most people just open their windows.

With that being the case, any rally that we get, I think, ends up being a nice selling opportunity until we get a heat wave. We are probably a few months away from that, so it does make a certain amount of sense that we are just hanging around.

Market Resistance and Long-Term Outlook

The $3 level above for me is going to be a major ceiling for some time and I just do not see breaking above there very easily. If we break down below the $2.50 level, well, that gets really dire for natural gas. At that point in time, I might be somewhat nervous shorting to be honest with you.

I do prefer to see the market bounce a bit before I short because, quite frankly, it just gives you more room to work with, because we have sold off so aggressively. But there is no demand for natural gas.

Later this year, once the Europeans discover that there is still damage in Qatar for liquefied natural gas, there is a very real world in which the United States contract, the one you are looking at and trading daily, will rise because, quite frankly, there will be more export. I do believe it is probably only a matter of time before the Americans put up more storage, so it will probably balance the market out over several years. We should start to see winters pick up quite lively in this market, even more so than they have in the past. But this time of year, there are just no bullish factors whatsoever.

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