Natural Gas Price Outlook – Natural Gas Drifts Lower

Natural Gas Technical Analysis

The natural gas markets have fallen a bit during the early hours of Tuesday as traders continue to look at this as a market that clearly will have some issues going forward. After all, the biggest problem natural gas has right now is there’s no heating demand. And it is worth noting that the natural gas market is very cyclical and this time of year just generally isn’t that great.

If we were to get some type of heat wave in the United States, it could drive demand up. But as things stand right now, I think we’ve got a situation where you still have to believe that any rally at this point in time is more likely than not going to end up being a selling opportunity. I think you have to look at natural gas with a lot of suspicion. The $3 level is an area that I think will continue to be somewhat important to pay attention to, and as a result, I am looking for signs of exhaustion in that area to start shorting. If we were to break down below the $2.80 level, then you can make a real argument for some type of serious breakdown to about $2.50.

As things stand right now, I think it’s going to be more or less range bound, but I still favor fading rallies as they give us a little bit of opportunity. If we were to break above the $3.20 level, then we have to start to pay attention to whether or not the market is starting to price in the quarter months. We’re away from that day, but it is coming. So be aware of that. Whether or not we completely collapse, I don’t know if that’s going to happen this year. I don’t think we flush all the way down to $2 or anything. It is possible, but I think what you’ve got now is a situation where it is a choppy market with more downward pressure than up.

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