Natural Gas Price Forecast – Natural Gas Continues to Meander

Natural Gas Technical Analysis

The natural gas markets have been rather flat over the last several days, and of course, Thursday wasn’t any different. With that being the case, I think you’ve got a situation where natural gas is worth paying attention to from an investment point of view.

But if you were a shorter term trader, this is a scalping opportunity at best. It is worth noting that the $1.50 level underneath it is a major barrier. And I think a lot of people will be paying close attention to it. Historically speaking, once we get close to the $1.50 level, drillers stop making money. Eventually, they stop drilling because you can’t just drill for charity.

Furthermore, sooner or later you start to run out of storage, so there’s no point in drilling anyway. I do think that given enough time, this is a market that is likely to balance pretty significantly. But I don’t know when that is. And therefore, I’ve had to approach it as an investment. We could in theory, get a bit of a winter storm late in the year, some type of heat wave, or it might be a situation where we are just simply waiting until demand picks up again next fall.

Either way, if you have the ability to play this market without leverage, it’s not a bad way to go. Just be aware of the fact that you might be sitting on your hands for quite some time. Ultimately, you could make an argument that we’re trying to form some type of double bottom right now, but the day to day nuance of this market is very difficult and therefore you have to be cautious about getting overly exposed, and that’s why I use an ETF. Finally, $2 above more likely than not will continue to be significant resistance so breaking above there would obviously attract a lot of attention.

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