Natural Gas Price Outlook – Natural Gas Drifts Lower in Overextension

Natural Gas (NG) Technical Analysis

Natural gas drifted a little lower from exhaustion in Wednesday’s session. The market gapped slightly lower during overnight trading, rallied briefly, and then gave back those gains. Conditions appear overextended, and a pullback now seems likely, as eventually gravity comes back into play here.

There’s little interest in shorting at this time of year, as demand should increase with plunging temperatures over the coming months. The December contract reflects seasonal strength, with the largest consumers located in the northeastern United States and northern Europe. Places like New York, Philadelphia, and Chicago will all be demanding more heat soon.

While some have suggested that natural gas could one day be used to power AI data centers, that narrative remains speculative and distant. A drop from current levels could target the $4 area or possibly $3.45, aligning with the lower end of the recent gap. A full gap fill seems unlikely, but a meaningful sell-off appears imminent. You should continue to look at this as a market that is going to be “buy on the dip” going forward, as we continue to see demand rise over the longer-term.

Warmer weather forecasts in the U.S. and upcoming inventory data will play a key role in the short-term direction. The goal is to see a sharp decline or a few days of consecutive weakness, followed by a rebound that presents a buying opportunity. There’s no interest in shorting or chasing natural gas at these elevated levels, as it is a dangerous way to jump into a trend.

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