Natural Gas Price Outlook – Natural Gas Cannot Sustain Buying Pressure

Natural Gas Technical Analysis

The natural gas market is slightly positive in the early part of Tuesday only to see selling and for it to drop slightly negatively later. So, with that being said, I think you’ve got a situation where natural gas remains the same market that I’ve been talking about for weeks now where you’re looking for short-term rallies to take advantage of.

I’d love to see somewhere near the $3 level that I can fade, but I don’t know if we’re going to get that. I honestly think this is a situation where short-term rallies, the minute they show exhaustion, I think traders are willing to step on natural gas. And I do think that it eventually finds its way down to the $2.50 level. In the short term, the $2.80 level would be an area that could offer a bit of resistance as well. And you must keep in mind that this is a US-based contract.

I know a lot of our viewers from around the world get confused sometimes when natural gas just falls off of a cliff, but this is about US weather. Most trading is done in the Henry Hub contract, which is based out of Louisiana. We do have the added potential pressure this winter of Europeans buying 250 billion in US energy, but we don’t really know the mix of that yet. So that gas might be a big winner this winter, but we’re not pricing that in yet.

We are still pricing in the fact that there is no heating demand in America and quite frankly, it’s not extraordinarily hot either. So, it’s not like electricity demand has skyrocketed for air conditioning. Furthermore, you have to keep in mind that if the economy is slowing down, that is going to drive down demand for electricity as well, which, of course, is quite often produced by burning natural gas.

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