Natural Gas Price Outlook – Natural Gas Pulls Back Slightly

Natural Gas Technical Analysis

The natural gas market has fallen a bit in the early hours on Tuesday, as we are obviously pretty stretched out at this point. Ultimately, I think a pullback to the $4 level at the very least is likely, and then after that, the $3.60 level. This is a market that I think continues to be bullish over the next several weeks, but we do need to see some type of pullback in order to find value. We’ve recently had the so-called golden cross, when the 50-day EMA crosses above the 200-day EMA, which is a longer-term bullish signal.

Keep in mind, this time of year is very cyclically bullish, and I’m looking for something along the lines of what happened for the November contract in the December contract that we are now trading. That was a big gap higher, a pullback to fill the gap or come close to it, and then a launch higher from there. A lot of this comes down to demand and temperatures in the United States as well as Europe.

If we do, in fact, start to get colder temperatures—and one would think that we will in December—it will drive the price of natural gas higher. In fact, I think we are more likely than not to test the $4.90 level, which was the absolute high at the very end of the busy season last year. So, I look at dips as potential buying opportunities.

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