Natural Gas Price Outlook – Natural Gas Continues to Look Bullish

Natural gas has rallied quite nicely during the early hours here on Wednesday as we continue to see noisy trading in a market that is obviously very bullish.

Seasonal Strength and Contract

Keep in mind, this time of year is typically bullish for natural gas as temperatures drop, and people go looking for heat to drive up the price in places like the United States and Europe. And therefore, I don’t short the natural gas market during this timeframe. A short-term pullback would be lovely, though, because quite frankly, it’s a little overdone since we signed the December contract. But now we’re in the January contract.

January, of course, is one of the high-use contracts for the year. Therefore, I do think that if we do fall, I don’t believe that we’ll fill the gap, at least not yet, from the entrance into the December contract. And therefore, I think your pullbacks will be somewhat shallow. It is reasonably warm in the Northeastern part of the United States, but we are getting cold temperatures over the next couple of days. And that might be part of what’s going on here.

The other thing to keep in mind is that Thursday is Thanksgiving, so that will keep the United States out of the game, and the United States, quite frankly, is one of the biggest players here in this contract, as it is a US-based contract. There will be extended hours of trading, so there will be a little bit of movement, but unless something drastic happens, I suspect that we will probably have a lot of nothing ahead of us for the next 24 hours. Friday will be open, but it will be thin volume because most Americans don’t bother coming to work the day after Thanksgiving, but it will be open, and we will be bouncing around.

I would love to see this market pull back towards the $4 level. Let’s have to wait and see if we get that opportunity.

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