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Natural Gas Price Forecast – Natural Gas Markets Continue to Recover

By:
Christopher Lewis
Published: Jan 24, 2024, 15:01 UTC

Natural gas markets rallied a bit during the course of the trading session on Wednesday, reaching above the $2.50 level. All things being equal, this is a market that I think continues to see a lot of volatility.

Natural Gas pipes, FX Empire

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Natural Gas Price Forecast Video for 25-01-2024

Natural Gas Technical Analysis

Taking a look at the natural gas markets you can see that they rallied a bit during the trading session on Wednesday in the early hours. However, it does look like we are going to have to deal with a gap at this point. I think it’s probably only a matter of time before natural gas starts selling off again, so I’m looking for signs of exhaustion.

We are right around the $2.50 level. So that being the case, I think you’ve got to look at it through the prism of trying to form some type of range longer term. When I look at the charts rather zoomed out, I suspect that the $2 level underneath is going to continue to be the floor in the market, while the $3 level above, perhaps even as high as $3.33, will be your ceiling.

We are in an area where you would expect to see a little bit of a bounce, but I think the uptrend or any upward movement at that point is somewhat limited. Futures traders are already starting to look towards the March contract, and that of course means that winter is almost over. It’s not that we can’t rally, of course we can, and it’s not even that we can’t break out to the upside, it’s just that we have a massive amount of supply out there and quite frankly, the winter has been extraordinarily mild.

The northeastern United States has been spared any serious weather until recently. And at this point in time, one would think that there might only be one more winter storm ahead, and therefore heating demand will drop. From an industrial standpoint, you also have to wonder how much demand there will be for natural gas if electricity consumption drops due to a recession.

With this, I think we will continue to look at this market through the prism of a range between the $2 level on the bottom and the $3.33 level on the top, perhaps for the next several months. As we’re around that crucial $2.50 level, I would expect to see a little bit of confusion, but the closer we get to the 20-day EMA or the 50-day EMA, the more likely I am to start selling again.

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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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