Natural Gas Price Forecast – Natural Gas Markets to Bounce Around $5.00

Natural gas markets have rallied initially during the trading session on Friday but gave back the gains as we hang around the $5.00 level. I would anticipate that this is an area likely to cause a lot of noise, because quite frankly it is a big headline number. Nonetheless, the market has been quite a bit overdone and therefore I think what we need to pay close attention to is whether or not a pullback comes. That pullback is not necessarily something that I want to sell into, rather I think it offers a unique buying opportunity in the short term. Longer-term, natural gas has no business being this expensive.

NATGAS Video 13.09.21

Part of the argument is that demand is picking up as economies reopen, and I certainly can see where that would be the case. However, there is an abundant supply of natural gas longer term, and shorter-term it simply games that Russians are playing with Europeans, and of course the recent hurricane in Louisiana did nothing to help the situation as refineries were shut down. Given enough time though, with these high prices I can assure you that American fracking companies will pick up the slack and perhaps even new refineries will be built.

In parabolic markets like this, you quite often have vicious turnarounds, so you need to be very cautious about getting overly exposed to this market right now. Chasing the trade is a great way to lose money, and that is certainly something that you do not want to do at this point. Caution is the better part of valor, but I do think that the $4.50 level will offer quite a bit of support.

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