Natural Gas Technical Analysis
The natural gas market has gapped lower to show signs of weakness early on Friday. But let’s be honest here: this is a time of year that is going to be very noisy due to the fact that interest rates have been driving down business consumption, at least in theory. Of course, we have the weather all over the place in the United States, which is the main story.
Nights are getting cooler, but the days are still plenty warm, and therefore heating demand has not picked up quite yet. We are getting fairly close to the December rollover, and once we start to talk about the month of December, we start to talk about heavy usage for heating. Clearly, the regime and attitude of the natural gas markets will more likely than not change a bit.
The Season Is Coming Soon
This year could be interesting due to the European Union perhaps having to import quite a bit of LNG from the United States. Regardless, this is a cyclical market. We have gone from bearish to a little bit of a spike in the middle of September due to cooling demand and electrical demand for AC, and then we fell as there was less and less demand for natural gas.
We are creeping our way higher, and I think that is the way I would characterize this market. It is more or less a buy-on-the-dip scenario as we are going from neutral to slightly bullish, and that, if history proves to be correct, should continue to be the pattern that we see over the next couple of months. $3.30 right now is our major barrier.
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