Natural Gas Price Outlook – Natural Gas Drops Again in Early Wednesday Trading

Natural Gas Technical Analysis

The natural gas market initially did try to rally a bit, only to turn around and show signs of exhaustion. At this point, the natural gas market looks as if it is trying to reach the bottom of the gap that had formed back in late August. When looking at the longer term chart, you can see that the uptrend line is still offering support from back in February of 2024. And with that being said, I think we have a situation where short-term pullbacks will be looking for some types of support, but all things being equal, this is a market that’s getting ready to roll over to the November contract on Friday.

And it’s likely that we’ve got a scenario where the November contract rises in price to open as we start to look towards colder weather and traders price in increasing demand during rollover. We aren’t quite to the point where we need to jump in and start buying yet, but we are getting close. The gap down at the $2.72 level or so coincides nicely with this trend line.

So, I do think the downside is somewhat limited. We start to price in the idea of colder temperatures in November soon, and then of course December. Ultimately, this is a very cyclical and seasonal contract, and therefore I am looking for that seasonality to play out. What I need to see is an impulsive jump to the upside based on a weather report or some other kind of external factor.

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