Natural Gas Price Outlook – Natural Gas Continues to See Consolidation

Natural gas gaps higher to kick off the trading session but has dropped since then as the market probably does not have quite the gusto it did when we jumped into the December contract. Today, as we roll over into January, we are still in the midst of consolidation in this area right around the $4.60 level. I do think we need significant pullback in order to offer enough value to really put money to work here because this market has been so overdone. The $4 level underneath should be a significant support level, as it has been both support and resistance in the past.

Key Support and Seasonal Dynamics

We have the 50-day EMA racing toward the $4 level. If the market were to break down below there, then I think you have an opportunity to perhaps see natural gas try to fill that massive gap from the entry into the December contract, but that is not really what I am looking for. What I want to see is something to the effect of a 20- or 30-cent drop and a bounce that I can get involved in.

This time of year, it is almost impossible to short natural gas because of the demand that will be coming out of the United States and Europe. For the month of January, one would think that demand is pretty high. Although for what it is worth, as things stand right now, temperatures in the Northeastern part of the United States are very mild. It is almost spring-like. So we may get that pullback sooner rather than later, and I am more than willing to start buying on the bounce so that we are getting involved on the right-hand side of the V-shaped pattern.

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