Natural Gas Price Outlook – Natural Gas Opens December Contract Higher

Natural Gas Technical Analysis

The December contract for natural gas opened around $3.80, causing a massive gap in the continuous chart. At this point, I suspect it will be very much like last month, where we gap higher, maybe rally a little bit, and then pull back to fill that gap. So that’s the play here — we’re going to buy the pullback that fills the gap and take advantage of what is, historically speaking, a very strong month. After all, there is more demand for natural gas in December than there is, say, in July, typically speaking, because of the colder temperatures in the United States and Europe.

We have recently tested the $3 level and found plenty of buyers. I think at this point, the floor in the market probably moves up to the 200-day EMA, right around $3.25. All things being equal, this is a market that I think goes higher again this month, but you also have to wait to find some type of weather to celebrate, per se. This is just an anticipation of how things are going to get colder, and as a result, I think you have to look at this as a market you’re trying to find value in.

It’s difficult to chase the market all the way up here, but clearly this is an asset that is starting to follow that cyclical trade — just as in a couple of months, we’ll start to think about the idea of selling. But right now, natural gas is going to be all about those colder temperatures, and it should remain extraordinarily bullish. Look at pullbacks as potential buying opportunities.

Get the edge in natural gas trading — find out how this event could influence your next move in our education center. For a look at all of today’s economic events, check out our economic calendar.