Natural Gas Price Analysis – Natural Gas Drifting on Tuesday

Natural Gas Technical Analysis

The natural gas markets are talking about the July contract, and we did get a little bit of a jump a couple of days ago due to the idea that there is typically some type of heatwave in July that will cause electricity demand to pick up. It will drive up demand for natural gas. It will obviously be empty storage short term. And that’s what I think we are looking at right now.

We are also seeing that the markets recognize that the demand so far hasn’t really picked up that much. You may see a little bit of an upward drift overall, but I am still very bearish on this market, at least until we start to talk about cold month contracts. At that point, you’re probably going to start hearing stories about the Europeans importing natural gas from the US in large amounts because the supply will be disrupted from Qatar this year.

Seasonal Trading Dynamics and Support Levels

Until then, I am treating natural gas like I do every year this time of year. I fade short-term rallies. In fact, I do think that we probably make our way back towards the $3 level, but it doesn’t mean we go straight down. This is kind of a quiet, bumping around type of grind time of the year.

The $3 level is not only a large, round, psychologically significant figure, but it’s also backed up by the 50-day EMA for support. If we were to turn around and break above the high on Monday, that could open up the $3.50 level, but really, I’m not interested in buying that. I’m looking at an opportunity to sell any rally that shows the first signs of exhaustion.

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