Natural Gas Price Analysis – Natural Gas Tests $2.65 Floor Amid Mild Weather and Supply Glut

Natural Gas

The natural gas market has dropped a bit during the trading session on Monday as the natural gas market continues to look very lackluster. The $2.65 level looks to be a bit of a short-term floor. We did bounce from there about a week and a half ago, so it’ll be interesting to see how this plays out.

A bounce from here could open up the possibility of some type of an attempted recovery towards the 50-day EMA, but I think you’ve got a situation where if we were to break down from here, the $2.50 level might be the next psychologically important support level.

The market at this juncture continues to see higher rates, but more importantly in the case of natural gas, we’re in a time of year when it’s very comfortable. In fact, I’m doing this video with the windows open right now. I don’t need heating, I don’t need cooling, and therefore I don’t need natural gas.

Seasonal Demand, Weather Outlook, and US Supply Gluts

Remember this is a uniquely American contract. It really doesn’t, unless something catastrophic happens, matter what’s going on in the European Union.

Now, once we get towards colder contracts—right now we’re trading the September futures contract, then you start to price in heating demand. But there is such a glut of natural gas in the United States right now, it’s going to take quite a bit to make that come into play.

It will eventually in a seasonal pattern like it does pretty much every year, but right now, natural gas just is limp and is showing no signs of turning around.