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Natural Gas Price Forecast – Natural Gas Finally Pulls Back

By:
Christopher Lewis
Published: Aug 31, 2020, 15:28 UTC

The natural gas markets pulled back a bit during the Monday session as it appears the hurricane will do a limited amount of damage to supply from the region.

Natural Gas

The natural gas markets pulled back to kick off the week on Monday, as it has become far too overvalued. This being the case, I suspect that we might be able to get a ‘value trade’ if we are patient enough. The market clearly has support in the area of $2.40, as there is a big gap in that area. The next support level is closer to the $2.20 level, where there is a lot of structural demand. The 50 day EMA is also in that area, so it wouldn’t be a big surprise to see technical traders jumping in at that point as well. The market continues to have a lot of short-term reasons to rally, so I am currently not looking to short it, although I can certainly see why some would.

NATGAS Video 01.09.20

The US dollar has been under significant pressure for some time, and this helps commodities in general. This will more than likely continue to be the case, as the Federal Reserve has raised the bar to rate hikes even higher than before. Because of this, the currency markets will have their say. The demand picture should also continue to pick up as America and Europe are heading into the fall season. This is a bit of a ‘one-two punch’ when it comes to pricing, and there have been major bankruptcies in the sector as well, helping to drive up price as well. With this current set up, I believe that we will get an opportunity to pick up natural gas on these dips going forward, as it should be plenty of interest underneath. We have recently seen the “golden cross”, which in and of itself can cause some buying.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.

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