Natural Gas Price Forecast – natural gas continues to chop

Natural gas markets rally during the day on Friday after initially reaching down to the $4.25 level. As I record this, the market is at the $4.50 level, which is essentially the “fair value” of the overall consolidation area that we have been in.
Natural gas daily chart, December 10, 2018

Natural gas markets seem to have a lot of confusion built in, because we have the seasonal bullish pressure of cold temperatures in the United States, and then we have the fact that there is a ton of natural gas available for anybody who’s willing to stick a straw on the ground and most of the United States. Because of this I believe that the bullish pressure as a temporary thing, even though we have seen a massive amount of inventory burn through. Keep in mind that at these high prices there are plenty of suppliers that are willing to step into the market and sell.

NATGAS Video 10.12.18

I think it’s only a matter of time before there are sellers on rallies, so I’m waiting to see rallies that show signs of exhaustion that I can start shorting again, especially near the $4.75 area, which extends to the $5.00 level. At the $4.00 level underneath is massive support, so if we were to turn around to break through there, I think that would be the end of the seasonal rally and could send natural gas much lower. However, I think that’s more of an early January story at this point, and I think that between now and the end of the year simply fading rallies will probably continue to be the best way going forward. Expect volatility and keep your position size relatively small but I think that we will eventually have the sellers coming in and take it over.

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