Natural Gas Price Outlook – Natural Gas Continues to Hang Around $4

Natural Gas Technical Analysis

The natural gas markets initially did try to rally a bit during the early hours on Monday only to roll over and fall. The $4 level I think continues to be an important area from a psychological standpoint and perhaps from an options standpoint. So, I watched that closely. If we get a daily close significantly below the $4 level, I think that’s the beginning of the end for the natural gas rally this season.

After all, temperatures are warming up in the United States, and that will bring down demand. On the other hand, there are a couple of things that keep the natural gas price elevated, one of which, of course, is the fact that this winter was so cold that we depleted some of the supply. So, they’ll probably be max drilling a little later than usual this year. And of course, the issue in Europe and whether or not we’re exporting natural gas to Europe in bulk quantities or not is still kind of an open question. With that being said, I do think that natural gas will eventually roll over and once it does from its cyclical high, it will be a huge move lower, it almost always is.

So, typically, what happens is this time of year, I get a couple of trades that get stopped out because I tried to time it. And then eventually one of my trades works out and it ends up paying for everything I lost and more. So it’s just temperatures. It’s just hard to tell. You never really know when that last winter day is. It’s a bit of a process. Not to say I am bearish. I’m waiting to see if we can get a daily close below this $4 level to get a little bit more aggressive.

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