Natural Gas Price Analysis – Natural Gas Trying to Bottom

The natural gas markets look as if they are trying to find some kind of floor as traders look ahead to the March contract. The commodity has dropped sharply, but the dynamic may be shifting.

Natural Gas

Natural gas markets are trying to find their floor just above the \$3.25 level on Tuesday, but after the breakdown \$3.00 could be the actual floor. Buying on dips is advisable in this type of environment because you can’t short after this type of fall. Futures markets have rolled over to the March contract and just fell apart, while spot contracts were just over the moon trying to figure out what the cost was going to be. During a major winter storm it is cold and still freezing, but this is only going to last so long and short‑term volatility could offer short‑term opportunities.

Source: TradingView

Market Outlook and Strategy

I don’t know if we have a sustained rally ahead of us. Probably one more rally this winter where it jumps to \$5.00 and then you get out and start looking for a place to short for the rest of the year. At this point in time \$3.00 is an area that’s going to be difficult to break below, but the selling has been fairly relentless. There is still plenty of supply and the market over‑reacted initially and now seems to have come back to life. If you’re trading a spot contract as a CFD, your price is going to be higher, but this tells you what the market expects to see in March, and that’s ugly pricing.