Natural Gas Price Outlook – Natural Gas Continues to Grind

Natural Gas Technical Analysis

The natural gas market initially did try to grind a bit during the early part of Monday to the upside, but it looks like we’re continuing to struggle right about where you would expect us to at the 50 day EMA. It is a little cooler in the United States at the moment, but it’s also going to get warmer next week. Like I’ve been saying, I still expect another drop lower. The question at this point really, I think, is, can we get down to $2.50? I think that’s still an open question, but I do think we’re going to lean in that direction.

I also recognize that we are getting late in the summertime, and we are jumping into autumn here fairly soon, in a couple of weeks. And while autumn itself isn’t necessarily a major uh time of year to burn a lot of Natgas, you can see that the market will switch over to the October contract on the 26th of September. And it’s about then that we start the process of thinking about going higher, typically weather dependent, of course. October can be very hot at times, but then you get November, and people typically start to turn their heating systems on and run them for the next three or four months.

So, with that being the case, I think you’ve got a situation where we’ve probably got one more dip. And then what I’ll really be looking for at that point in time, and probably on the weekly timeframe, is some type of bottoming pattern that I can trade in order to play the winter bounce, which could be quite significant this year as the Europeans are looking to buy $250 billion worth of energy from the United States in the next year.

One would assume that a significant portion of that will be natural gas. Although I don’t know that the details for that have been released. And therefore, it should just add a little more fuel to the fire if you will, for this winter rally, but I think we’re still a little bit early.

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