Natural Gas Price Outlook – Natural Gas Rises on Friday

Natural Gas Technical Analysis

Natural gas has risen during the early hours on Friday, now trading above $4. That’s not a huge surprise, as we are in the December contract. What I find surprising, however, is that we continue to gap. Yes, temperatures are getting a little bit colder in the United States presently, but what I’m looking for now is a bit of a drop that I can start buying into. I really don’t like chasing these moves.

You can see what happened with the November contract—we gapped, went straight up, then pulled back to fill that gap before moving higher. That’s basically what I’m looking for here. Somewhere around $3.60, I’d love to buy this market, but we’ll have to wait and see. I think we’ve got a situation where if we can break above the $4.25 level, it opens up the possibility of a move toward $4.50.

All things being equal, this is a market where I believe you find value in dips as we enter the coldest months of the year, at least in terms of the natural gas supply and demand equation. As long as temperatures remain cold—and they will for the next couple of months – natural gas is a market that I only buy. I have no interest in shorting. This is a cyclical trade, and I believe in the cyclical nature of natural gas. It gives you an overall direction and removes some of the guesswork. The next step, of course, is finding value—and value comes in the form of lower prices. So, for now, it’s a wait-and-see game for natural gas.

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