Natural Gas Price Outlook – Natural Gas Rallies Early on Tuesday

Natural Gas Technical Analysis

The natural gas market has rallied a bit during the early hours here on Tuesday as we continue to consolidate overall and grind right around the 200-day EMA. Keep in mind that the natural gas markets are extraordinarily volatile under the best of times. And while typically this time of year we end up losing quite a bit of value due to a lack of demand, this year has been a bit different for a multitude of reasons.

The first one, of course, is the fact that the European Union is importing more US natural gas because of a lack of ability to get it from Russia. Because of this, it has put a little bit of a knock-on effect over here in the Henry Hub natural gas contract, which, of course, is US-centric. Furthermore, we had a heat wave. So that did drive up demand for electricity to produce air conditioning, but really at the end of the day, I still see this as a very cyclical market. And right now, we are looking for a trend line break or some type of rally that shows signs of exhaustion.

I really don’t have any interest in buying natural gas, but I do recognize it’s not necessarily melting down either. This is more of a shorter-term type of market where you are fading signs of exhaustion after short-term rallies. I just don’t see this market being able to break above $4. So that is for me at least the line in the sand. If we were to break above there, then my analysis would change completely. If we drop from here, the $3 level will eventually end up being a target.

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