Natural Gas Price Analysis – Natural Gas Faces 50-Day EMA as Storage Overwhelms Demand

The natural gas market jumped a bit in premarket trading on Wednesday, as the markets rolled into the US. However, we still have a massive oversupply of gas, and therefore, traders are cautious.

Natural Gas

The natural gas market has jumped a bit during the early part of the trading session here on Wednesday, clearing a little bit of a barrier in the form of $2.82, but ultimately this is a market that still has a lot of seasonal headwinds. So, I look at any rally at this point as a potential selling opportunity, at least for now.

The storage situation in the United States is still strong, and the weather hasn’t been horrifically hot or anything. So, the thinking, of course, would be that supply will continue to overwhelm demand. There are some blurbs out there about Qatar buying natural gas from the United States to fill orders for clients, specifically the European Union, so that will be a story the further we go into the year. But right now, this is still a seasonally weak time of year, and the storage capacity is just bursting at the seams.

Seasonal Headwinds and Technical Resistance

So, I remain bearish. I’m paying special attention to the 50-day EMA, which is just above, and I am also paying special attention to the $3 level. The large, round, psychologically significant figure has been important multiple times in the past.

Natural gas daily chart shows price approaching the 50-day EMA and $3 resistance after a rebound from recent lows. Source: TradingView.

The End of the Quiet and Bearish Season

Now, here shortly, in a couple of weeks, we roll over into the October contract. That’s when you start to think about cooler temperatures. It’s not necessarily a strong time of year, but you are starting to turn the heat on a couple of days out of the month. So, we are getting close to the end of the quiet and bearish season.

But all things being equal, the market is likely to still look at this as a somewhat lackluster asset, at least until demand really starts to pick up.