Natural Gas Price Forecast – Natural Gas Markets Continue to Grind Away

Natural Gas Price Forecast Video for 05.04.23

Natural Gas Technical Analysis

Natural gas markets have done very little during the trading session on Tuesday as we continue to see the market use the $2.00 level as a potential floor. It’s a large, round, psychologically significant number, so it does make a certain amount of sense that we would see the market levitate in this area. After all, the market will continue to see a lot of hesitation to break down, because the $2.00 level has traditionally been roughly the bottom of the range for the warmer months. As temperatures heat up in North America and Europe, demand will of course drop.

That being said, natural gas markets continue to reflect the fact that the global economy is going to be slowing down, therefore electricity production will probably need a lot less of it. At this point, the main reason natural gas has underperformed crude oil is that it is not centrally planned, meaning that there is no OPEC to do massive production cuts. That’s the 2^nd derivative of this trade, as the OPEC production cut suggests that there are serious demand concerns around the world. To suddenly cut 1.6 million barrels per day suggests something is going on. We are setting up for a massive recession, and therefore industry will demand a lot less power.

Any rally at this point in time should be thought of as a nice selling opportunity, especially if we get anywhere near the 50-Day EMA, presently sitting at the $2.76 level and dropping. I don’t necessarily think that the market is going to get there, but if we do see a lot of buying pressure suddenly, it could be a bit of a short squeeze. Ultimately, I would be looking for signs of exhaustion near that area to start shorting. On the other hand, if we were to break above there, then the $3.00 level should offer a significant amount of resistance as well due to the fact that it is a large, round, psychologically significant figure. The natural gas markets collapsed for a reason, and that reason has not changed. Ultimately, this market will remain bearish going forward.

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