Natural Gas Price Outlook – Natural Gas Continues to See Pressures

Natural Gas Technical Analysis

The natural gas market initially gapped higher to kick off the trading session on Tuesday but found quite a bit of noise near the $3 level. The $3 level, of course, is a large, round, psychologically significant figure that a lot of people will be paying close attention to. If we continue to break down from here, I’ll be watching the $2.85 level because if we break below there, then I think natural gas will continue to fall.

Alternatively, if we do recapture the $3 level on the upside, then we could make a run toward the $3.20 level, possibly even as high as the 50 day EMA, which is currently at $3.29. Natural gas has a major problem this time of year in the sense that demand is typically fairly weak unless we get a heat wave in the United States.

As things stand right now, it’s relatively bearable. And of course, there won’t be much in the way of heating demand. So then natural gas has to rely on exports, while exports in the liquefied natural gas part of the equation certainly are going to be picking up as the European Union is buying $250 billion worth of US energy every year for the next three years.

That hasn’t really kicked off yet. So, whether or not that comes into fruition this winter remains to be seen. But as things stand right now, it just looks like we’re at an extremely low level where we are testing pretty significant support. I’m watching and waiting to either fade rallies that show signs of exhaustion or sell the market if it breaks down below the $2.85 level.

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