Natural Gas Price Analysis – Natural Gas Pauses as Thin Holiday Volume Rules

Natural Gas Technical Analysis

The natural gas market rallied slightly on Friday, but keep in mind Friday wasn’t a real trading day. The New York session was closed as Americans are away for the Independence Day holiday. With that, the trading that was done was probably position squaring overnight in Asia, et cetera. So I don’t read too much into the candlestick, but really, there’s not much to read even if it were a normal day. We’re staying in that same tight range that we had been in for a while as we continue to hover around the 200-day EMA.

Market participants continue to look at this as a market that is just looking for some type of catalyst. And while we do have a heat wave in the United States, the reality is that the heat wave is going to be very short-lived. It won’t be enough to take down the supply, and therefore, the price won’t really move.

Support Levels and European Supply Outlook

If you’re a short-term, back-and-forth type of range-bound day trader, this might be a good market for you. But anything beyond that, I think you’re going to struggle. If we were to break down below the $3 level, that could have opened up a move down to $2.75, but I don’t really see that happening. If we were to spike higher based on maybe another heat wave, I look at that as an opportunity to get short at the first signs of exhaustion.

We previously thought that Qatar would not be able to supply the European Union with the usual amounts of liquefied natural gas, and that could drive up the price of natural gas here in the US contract. But it looks like the flow of liquefied natural gas out of Qatar is up to about 80% now, so by the time winter hits, it’s probably going to be fairly close to normal, if not back to normal. So, we’re just in a normal market, and this time of year tends to be very quiet.

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