Natural Gas Price Forecast – Natural Gas Continues to Consolidate

Natural Gas Technical Analysis

Natural gas rallied during the early hours on Tuesday as we continued to consolidate overall. The $1.50 level underneath continues to be a major support level. And I think when you look at the longer term charts it shows just how difficult it’s going to be to break down below there. Furthermore, you have to keep in mind that sooner or later, drillers will walk away from the fields because nobody really wants to work for free.

The supply issue for natural gas is that it’s still oversupplied, and it very well could be for a few months and that’s why I think that this is an accumulation phase because eventually we will see colder temperatures in the fall or we will see a heat wave in the summer that will cause a spike. Because of this, I have been involved in natural gas, but I’ve been buying exchange traded funds or ETF positions so that I don’t have to worry about the leverage. If you risk a thousand dollars that’s all you’re risking you don’t have to worry about your losses, gaining steam as it falls.

All things being equal, you have to be able to sit in this position for a while, but I do fully anticipate that later this year I’ll be collecting profit. Whether it’s in summer or fall, I don’t know, but this time of year is typically very quiet for this market, and a lot of larger commercials will be hedging contracts for long positions.

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