Natural Gas Price Analysis – Natural Gas Still Looking for Floor

Natural Gas Technical Analysis

The natural gas market has gapped lower to kick off the trading session here on Monday as it looks like we are going to go looking to the $3.50 level.

We have recently rolled over to the March contract, so that is important to keep in the back of your mind. You can see that natural gas markets are falling around the world. I think what we probably have here is one more jump between now and the spring thaw.

I can tell you right now, in the United States, it is very cold, and demand is obviously very high. The spot market is much higher than the futures market, but what this tells you is that the spot market is coming down. That is why you have to look at the futures market and the extreme backwardation for clues as to where we will go. After all, it is the professionals trading the futures markets, the CFD spot market, not so much.

With that being said, I do think a little bit of a bounce makes more sense than not, but I also recognize that the $4 level above is probably a short-term barrier. Expect a lot of basing here, sideways action in order to try to find the floor. Eventually, we do, maybe we get another storm, and it goes racing higher, but remember this index is almost solely driven by weather forecasts.

Keep advised on the next 10 to 15 days in places like Boston, New York, Philadelphia, Pittsburgh, etc. I believe at this point in time we are setting up for another bounce, but we don’t have the catalyst yet.

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