Natural Gas Price Analysis – NG Tests $2.50 Support Amid Seasonal Oversupply

Natural Gas Technical Analysis

The natural gas market is very quiet on Wednesday as we are basically sitting on the floor of recent trading. The $2.50 level underneath looms large as a large round, psychologically significant figure, and one would assume that it could have some effect on the market.

Ultimately, this is a market that’s very cyclical. I say this almost every day: this time of year is very poor for natural gas. Yes, I’m running my air conditioner right here in the United States, but the temperatures aren’t brutal, and we have plenty of natural gas. This is a US-based contract, and while there are exports to places like Asia, the amount of natural gas that the US produces on a daily basis is more than enough to handle that.

The one wildcard might be whether or not the Europeans have to import natural gas this winter. That could make things wild later this year, but so far, the market seems to be willing to look past that in the September contract. The Qataris are starting to import US liquefied natural gas to fill their orders to places like Germany. So, we’ll see how that plays out. That could be a bit of foreshadowing for later this year.

Seasonal Oversupply Keeps Rally Prospects Muted

Rallies at this point in time I still look at with suspicion because, quite frankly, the oversupply of natural gas is a well-known quantity, and of course, it’s just the wrong time of year.

If we fall from here, there does come a point where support comes back in. The $2.50 level I think, looms large from a psychological standpoint more than anything else, but there’s no real data to back up that there’s anything specific there, at least not that I know of.

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