Natural Gas Price Outlook – Natural Gas Jumps Again on Tuesday

Natural Gas Technical Analysis

The natural gas market has rallied a bit in the early hours of Tuesday, waiting for the Americans to come on board. We are sitting right around the $3.50 level, and the $3.50 level, of course, is an area that’s been important multiple times. Short-term pullbacks, I do think open up the possibility of buying opportunities, and it’s worth noting that of course, the jump in price is based on the colder weather outlook. That’s not a huge surprise. What I’ve been saying for a minute here is that natural gas is a cyclical trade, and it’s a strong win this time of year. It’s literally based on weather predictions, though. So, keep that in mind. We are getting fairly close to a rollover.

We’re about eight days from rolling over into the December contract, a contract that should be bullish regardless. I think we’re now in a situation where when you get to pull back your buyer, we gapped higher when we rolled into the November contract, came back to fill that gap, and then jumped again. I wouldn’t be surprised to see something similar to that going forward. We’ll just have to wait and see. The question now is, can we break the $3.58 level, because if we can, things could get impulsive. We could go looking for $3.80 and then finally $4. Either way, at this juncture, I don’t have any interest in shorting the market. If the natural gas market falls from here, it ends up being a nice buying option before it’s all said and done.

I really think that at this point, I probably won’t be thinking about shorting natural gas until at least February, and then you have to wait to see what the weather is going to be, depending on the contract you are trading. You generally start to see some time in March, things really start to fall apart for natural gas, typically, as we saw last year, you start to trade the April contract, you start to think about spring coming back to the United States and Europe, and that, of course, drives down demand drastically. At this point in time, you have to remain bullish.

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