Natural Gas Price Forecast: $2.80–$3 Range Remains Intact

Natural Gas Technical Analysis

The natural gas market has rallied somewhat significantly in the early part of the trading session on Tuesday, as we continue to see a lot of the same back-and-forth action.

Ultimately, this is a market that I think is looking for some type of direction, as we have a couple of different things happening at the same time. Storage in the United States, of course, is at a reading 5% above the 5-year average, as mild temperatures in the U.S. mean demand is down.

The Natural Gas Supply Is Abundant

I understand that there will be more exports this year, but the main driver will remain U.S. weather. The natural gas situation is abundant, and while we are starting to shift seasonality, where natural gas becomes a little more in demand, we still have a long way to go to draw down that storage.

Longer-term traders, I suspect, are probably just now getting into winter positions. Generally speaking, this time of year, I go from bearish—bearish through most of the summer—to neutral. This is a seasonal play for me every year, and one that I have found to be an important part of my portfolio.

I think a range continues to be very possible here. The $2.80 level has offered a bit of support, while the $3 level looks to offer resistance. Despite the fact that it has been a fairly good start to the Tuesday session, the price action has not changed anything at this point in time. However, sudden moves are to be watched out for.

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