Natural Gas Weekly Price Outlook – Natural Gas Has a Sideways Week

Natural Gas Weekly Technical Analysis

The natural gas market has gone back and forth during the course of the trading week as we are hanging around the $3 level, a large, round, psychologically significant figure in an area that you can see over the last couple of years has been both support and resistance. I find this interesting because there are a couple of different ways to look at this chart. You can look at the chart over the last 18 months or so and suggest that maybe we’re forming a massive head and shoulders pattern to drop natural gas down to $2.

I think that’s viable, but I also recognize that we are in an area that could be supported, and the time of year suggests that although it’s not a bullish time of year, we are within a month or two of starting to price in cold weather in the futures market. So, I don’t know if this is the floor, but I think this candlestick for the week that we just had is worth watching because if we can break down below the bottom of it, I think that gives us our answer. We probably break the neckline of the head and shoulders and go much lower.

On the other hand, if we break above the top of the candlestick, then I think we just continue to consolidate until winter. There are a lot of questions about what this winter will be like, not from a weather standpoint, but the fact that the Europeans are now buying $250 billion worth of American energy for the next three years in a row. And of course, they’re not buying Russian gas. So the question then becomes who’s buying Russian gas? Are there potential U.S. customers right now that will switch over to Russian gas because it could be cheaper? So, I think this is going to be a pretty tough winter.

I anticipate that the winter will be good for natural gas as usual. It might be better than we’re used to seeing. But right now, we’re in that time of year where heating demand is non-existent. And quite frankly, it’s been somewhat hot this summer in America, but not outrageously so, and as a result, electricity demand hasn’t skyrocketed either. Furthermore, speaking of electricity demand, if we do start to see a recession, that will drive down natural gas demand for electricity production, so keep that in mind. I think this past week’s candlestick is going to end up being very important.

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