Natural Gas Price Outlook – Natural Gas Drops on Forecast

Natural Gas Technical Analysis

The natural gas market has gapped lower to kick off the trading week on Monday as warmer-than-anticipated temperatures are expected in the eastern two-thirds of the United States. This, of course, destroys short-term demand, and you are seeing the reaction in price as demand becomes a concern.

We have now filled the gap from late October going into November, when we were rolling over into the December contract. So, futures traders will be happy with that. They really don’t like gaps, but it’s not something that has to happen. Now I think we are starting to look for weather forecasts for a couple of weeks out and try to determine whether or not the market really starts to take on a big demand situation. This is normal for this time of year.

Danger Is to the Upside

I do think that the danger right now is to the upside, not the downside, as we have sold off so viciously. But as you can see, Natural Gas is heavily tied to the weather forecast in the eastern part of the United States, specifically, the Northeast. So, with that being the case, you have to watch the weather and somehow make your decisions based on that, and anybody who lives in this part of the world can tell you the weather changes at the drop of a hat. So good luck.

At this point, I think if we can recapture the 200-day EMA, we could go looking to the $4.00 level, but if we can’t, we might go looking towards $3.00, which this time of year is an extraordinarily rare and poor sign for this market.

For a look at all of today’s economic events, check out our economic calendar.