Natural Gas Price Forecast: Flat Action Persists as Summer Demand Stalls

Natural Gas Technical Analysis

The natural gas market looks pretty much flat on its back early on Friday as traders are pricing the seasonality of this contract quite brutally. There is a massive amount of supply of natural gas out there, while at the same time the demand will be somewhat limited due to the lack of a major heat wave in the United States and, of course, no real need for heating in the summer. So, natural gas supplies tend to be pretty hefty this time of year, and they most certainly are this year.

That being said, we are about halfway through the September contract, and sooner or later traders will start to think about the autumn, which generally will be the beginning of more demand, as history has shown us.

Winter Demand and Supply Dynamics

There will be a lot of questions asked about Qatar as well because they are currently buying some liquefied natural gas to fill orders in the European Union, so it will be interesting to see how that plays out this winter. The last news that I read was that Qatar is at about 80% of production for natural gas, so I would assume that they are feverishly trying to rebuild that before winter hits in the European Union.

As things stand right now, this is a market that can be interpreted as a seriously bearish market, and it seems like it’s just waiting around. Remember, this is a U.S. contract, so this has more to do with the U.S. than the Middle East, although the situation in the Middle East could have more exports coming out of America; as things stand right now, that has been somewhat kept in check.

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