Natural Gas Price Outlook – Natural Gas Continues to See Overhead Pressure

Natural Gas Technical Analysis

The natural gas market has initially tried to rally during the trading session here on Tuesday, but we continue to see a lot of noisy behavior right around this 50 day EMA. The shooting star that formed during the trading session on Monday does suggest that we are, in fact, going to struggle, but it’s also worth noting that we’re at least trying to push higher. A pullback from here makes perfect sense because quite frankly, it’s not cold enough for a lot of natural gas demand in the United States, but it’s not exactly hot either, so there isn’t huge electrical demand. Furthermore, if the United States is in fact slowing down, that’s going to have a major influence on natural gas demand.

The seasonality will flip here fairly soon as we exit the poor part of the year for natural gas. But I don’t think we’re there quite yet and I do fully anticipate another drop in the short term. I don’t think you have to get aggressive here. I just believe at this point, you probably have a situation where traders are looking at this perhaps trying to push it low enough to fill the gap underneath current pricing, which could send natural gas all the way to $2.73 pretty quickly.

Possibly, they may even be thinking about $2.50, which is a large, round, psychologically significant figure and an area that’s been important in the past. I don’t really have any interest in buying natural gas, but if we did overtake the 200 day EMA, that would be the beginning of something that you would have to pay attention to. Ultimately, I believe that we will have one more pullback and then we’ll start to think about cold temperatures and rally from there. Again, I could be wrong and a move above the 200 day EMA might be reason enough to convince me that I am, that perhaps we are trying to do everything we can to go higher. Expect volatility, that’s normal with natural gas, but at this point I think we’re getting a little tired.

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