Natural Gas Price Outlook – Natural Gas Continues to Look Vulnerable

Natural Gas Technical Analysis

The natural gas markets have struggled a bit during the trading session on Friday as we are getting close to the end of the cold weather, and therefore, it makes a certain sense that we would see demand drop. We had recently formed a bit of a double top at the $4.40 level and now I think this is worth paying attention to. At this point, I anticipate that given enough time, the natural gas market could go looking at the 50 day EMA.

The 50 day EMA is an indicator that a lot of people pay close attention to. And then after that, you’ve got the $3.50 level. In general, this is a market that is very seasonal. And this time of year, you start to see a lot less in the way of demand. It is worth noting that we are now trading the April contract as of a couple of days ago. Keep in mind that April typically is warmer and then the next thing you know, in a couple of weeks, we’ll be looking at the May contract, which is perfect whether to not run your heat or your air conditioning in the United States for the most part. So, as a rule, you start to see lower pricing.

I think we may have just peaked for the winter, although there is the possibility that maybe we get a last minute winter storm to drive price back up, but that would be a short-term phenomenon. Quite frankly, the demand is just going to end up falling off of a cliff pretty soon and the price should reflect that. I am bearish on natural gas, but natural gas is a very dangerous market at times. So, you don’t want to put a huge position on right away.

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