Natural Gas Price Forecast: Cooler Weather Puts $3 in Focus

Natural Gas Technical Analysis

The natural gas market jumped, gapping higher to kick off the trading week on Monday, as traders are starting to focus on the idea of temperature drops in the United States. The October contract is coming to a bit of a conclusion of bullish pressure. We do get the November contract at the end of the month, but that being said, we are currently stuck in a bit of consolidation.

The EIA Report This Week Will Be Important to Pay Attention to

It will give us an idea as to whether or not there is enough drawdown due to exports and the idea that weather is starting to turn, and whether or not that is going to change pricing mechanisms.

But as things stand right now, it looks like the natural gas market is stuck between $3 on the top and somewhere right around $2.80 on the bottom. The 50-day EMA is flat, and the 200-day EMA sits above the $3 level, but it is drifting lower.

Ultimately, this, at least from what I can tell, still looks very range-bound. As a result, I have to play it that way. This time of year, we start to shift from bearish seasonality to neutral, and this is an interesting time of year because longer-term traders quite often will be putting their positions on.

Ultimately, we are going to need to see a significant drawdown in storage to make things change. We have not really seen that yet, and at last count, we were still running at about 5% above the five-year average as far as storage is concerned. So, there are still some bearish headwinds, but we are starting to think about winter.

If you’d like to know more about how to trade natural gas, please visit our educational area.