Natural Gas Price Outlook – Natural Gas Continues to Rise

Natural Gas Technical Analysis

The natural gas market has gone back and forth during the course of the trading session on Monday in the early part of the session. I think we’ve got a situation where we could pull back from here. Ultimately, you need to look at this through the prism of whether or not we can fill this gap. I don’t see any reason why we wouldn’t, but as things stand right now, this is a market that has gotten a little overdone.

Despite the fact that it is the December contract we’re talking about—and December will quite often end up being a very strong month—we have to see whether or not this momentum can keep up. I don’t suspect that it will, and I think this is going to look a lot like the previous month, where we had gapped higher, pulled back to fill that gap, and then bounced again. With that being said, the market is likely to pull back over the next several sessions, but we’ll just have to wait and see.

If we do, I’m not looking to short natural gas; I’m looking for an opportunity to buy cheap natural gas somewhere around the $3.50 level. A little bit of patience probably goes a long way. This time of year, due to increased demand, you have to be very cautious about shorting natural gas. It’s a market that, quite frankly, is very cyclical, and the December contract is one of the better ones for pricing. That doesn’t mean it goes straight up in the air forever, though.

Basically, if you include the rollover, a 30% gain last week can’t be sustainable without the proper weather actually showing. So, I’m looking for a buying opportunity. It’s hard to sit on your hands in this environment, I get it, but really, it’s only a matter of time before we find a reason to pull the trigger. I just wouldn’t chase it all the way up here.

For a look at all of today’s economic events, check out our economic calendar.