Natural Gas Price Outlook – Natural Gas Continues to See Selling

Natural Gas Technical Analysis

The natural gas market did try to rally a bit during the trading session here on Thursday but then turned right back around to show negativity. At this point it looks like we are going to continue to see a lot of problems in any type of rally as market participants will be looking at this through the prism of a market that I think is suffering due to a lack of demand, not only in heating but also in air conditioning.

After all, the temperatures in the United States are somewhat stable at the moment in a relatively comfortable range, so it doesn’t drive up demand for electricity. Natural gas may act a little bit differently later this year, though, although it would be expected to be positive. The question now is how much natural gas are Europeans going to end up buying from the Americans.

This is a US contract. It is mainly driven by US demand, but that may change a little bit in the cold months when Europe starts importing due to the latest trade agreements. In the short term, though, I think this is a market that every time it rallies, you have to look at it with suspicion and try to start fading the first signs of weakness. You can make an argument that we just broke down below the neckline of a massive head and shoulders.

But the only problem with that is that it means we would drop to about a dollar. And I don’t think natural gas is going to do that measured move that you would typically expect. It would not surprise me at all for natural gas to go looking to the previous gap near the $2.55 level. And as we are basically at $2.80, it’s not a huge move. Rallies should continue to see the $3 level as a potential barrier as well.

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