Natural Gas Price Outlook – Natural Gas Drops Early on Wednesday

Natural Gas Technical Analysis

The natural gas markets, as you can see, have dropped a bit during the early hours here on Wednesday, as we are hanging around an area that’s been both support and resistance a couple of times. And of course, we are hanging around the 50-day EMA. That’s enough to get the whole market paying attention to this area. And the fact that we are in the October contract and not really in the winter contracts yet means that we might get a little bit higher pricing in natural gas, but it is difficult to imagine a scenario where demand skyrockets.

Quite frankly, October can be hot in the United States. It just depends on the weather patterns. But so far, it’s not hot or cold at present time and as we head into October, unless we get a big draw in September, that causes some issues. And I think that’s what traders are looking at right now. The fact that temperatures in the United States are very comfortable. So that certainly influences demand.

Natural gas can also be used to produce electricity. And at this point, we have just received the PPI numbers coming out negative in the United States. That suggests that perhaps the economy will slow down. We’ve had a couple of negative looking numbers or at least poor looking numbers as of late. And in that environment, electricity demand should drop as well.

So, there’s a couple different things working against natural gas right now. And I do think that a pullback happens. Thinking maybe we’ll try to fill the gap closer to the $2.80 level. We’ll just have to wait and see. But I’m not ready to be bullish yet. I think we’ve got one more drop. And then we start to think about winter when things get much better for this market.

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