Natural Gas Price Forecast – Natural Gas Continues to Look Constructive, But Its Early

Natural Gas Technical Analysis

The natural gas market has been very choppy during the Friday session, but I do think it’s worth paying close attention to this market in this area because we most certainly see a lot of base building or at least potential base building. This is a market that has been oversold for quite some time.

So, to see it turn around would not be a huge surprise, just simply due to the fact that drillers will leave the fields if they have to continue to make almost no money or, worse yet, lose money. Drilling for gas, the $2 level above will continue to be important, so pay close attention to that. And if we can break above there, it’s likely that natural gas will continue to drive towards the $2.50 level.

Short-term pullbacks at this point will continue to look at the $1.50 level underneath as a major floor, and I think that is essentially what we’re seeing here. All of that being said, you do have to worry about whether or not there is going to be a catalyst for natural gas to go higher other than prices are low. Right now I don’t see it, but we could get a winter storm that causes some type of spike, or once we get to the hot weather, perhaps we get a heat wave.

Between now and then, I think you’re going to have to be very patient. A lot of longer term traders are almost certainly building positions down here, but it is difficult to hang on to this for the amount of time that might be necessary. It is because of that you should keep your position size somewhat reasonable. Certainly, you don’t want to jump all in and build up a huge position right away when it comes to natural gas. All things being equal, I believe then the $2 level is going to be crucial.

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