Natural Gas Price Outlook – Natural Gas Continues to Hover at High Levels

Natural Gas Technical Analysis

The natural gas market has attempted to rally with an initial gap on Tuesday, only to turn around and show signs of hesitation. The market is currently hanging around the $4.40 level and has been for a couple of days now. We gapped straight up in the air at the rollover to the December contract, which is what we are trading now in the futures market, and have since then just gone straight up until the last couple of days.

The question at this point in time is whether or not we are going to pull back. I think we will eventually, and probably sooner than most people expect, due to the fact that warmer temperatures are coming to the United States. This cold snap that we have been in over the last couple of days obviously drives up demand, therefore driving up prices, but given enough time, I do think that we will pull back and offer a bounce that you can take advantage of.

One of the trickiest parts of trading natural gas is that it rolls over every month. For example, we’ve had the rollover into the November contract and jumped straight up in the air. We rallied, we pulled back to fill that gap, and then now we’ve jumped up in the air yet again. We also had the same thing happen when we went from September to October. So, if that pattern continues, we should see a substantial pullback. Although I don’t know if we drop all the way down to the $3.40 level to fill the gap from the rollover this time, I think it’s probably much smaller, maybe much more reasonable than that type of fall. But we have not yet seen the price action that brings any type of value into this market.

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