Natural Gas Price Outlook – Natural Gas at a Crossroads

Natural Gas Technical Analysis

The natural gas markets have gone back and forth during the trading session on Wednesday as we are trying to sort out where to go next. All things being equal, this is a market that typically is fairly negative from a cyclical standpoint at this point in the year, as most traders will be focusing on the lack of heating demand in places like the United States. Ultimately, it is worth noting that there are some nuances this year in the sense that the Americans are selling that gas to the Europeans. But we also have to keep in mind that there are concerns about a recession, and that should bring in less demand for natural gas as well, at least from an electricity producing standpoint.

So, there’s a lot of pressure on natural gas, but the last couple of days have seen a shot higher. As we approach this previous uptrend line, you would expect some resistance, and we are also approaching the crucial $3.50 level, an area that has been important multiple times. That being said, I think you have to look at this through the prism of a market that is likely to continue to be a fade the rally situation. But I also recognize that if we break above the 50 day EMA, we could go racing towards the $4 level. On a drop from here, I’d be looking at $3 underneath to be a bit of a target and a potential place of support. This time of year, typically we do see a lot of weakness, and that’s why I’m so focused on the downside in natural gas at the moment.

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