Natural Gas Price Forecast – Natural Gas Continues to Build a Base

Natural Gas Technical Analysis

You can see that we have pulled back a bit during the trading session on Friday as we continue to see natural gas bounce around the same noisy behavior and area around the $1.60 level. All things being equal, I believe that the $1.50 level underneath is going to continue to be a major floor in the market and I do think that we will eventually see buyers come back in. The problem, of course, is that the season for natural gas to rally significantly has come and gone. Now, we may get a sudden snowstorm in the United States to help cause a bit of a spike or later this year, we might get a bit of a heat wave, but those are the two main drivers between now and fall.

So, what I have done is I’ve started to invest in natural gas. And the key word here, of course, is invest. I’m using an ETF. I’m building a position because I know eventually, we’ll get that spike and then I’ll just cash out. This is not money you want to leave tied up through leverage, nor is it something that you’re looking at very quickly. This is a market that will have to deal with all of the losses we will probably have to have some drillers go out of business, and then eventually we can turn around. The biggest problem, of course, is natural gas is abundant, so I think the upside is somewhat limited even in the spike next year, probably somewhere around $3 is about as good as it would get. All things being equal, this is just a small part of my portfolio, so I don’t put a lot of concern into this trade.

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