Natural Gas Price Outlook – Natural Gas Continues to See Choppiness

Natural Gas Technical Analysis

The natural gas market is currently hanging around the 50 day EMA showing signs of hesitation and the $3.50 level offering a bit of a floor in the short term. That being said, again, this is a market that I really don’t like buying this time of year. I really, truly don’t like buying at all this time of year. That being said, there were some blurbs about the Europeans actually producing gas, which is an interesting turn of events. And if that’s the case, that will drive prices down because part of what we’re seeing here is European buying of natural gas from the Americans.

Because remember, when you trade natural gas, you are trading the Henry Hub contract, which is called the Henry Hub contract because it’s in Henry, Louisiana. So, with that being said, fact that we are getting less demand in the United States and less demand in Europe for heating, that should drive prices down. Currently, to counterbalance that, we have the situation where Russian gas isn’t coming into the EU, at least not legally, and therefore it drives down some of their supply and they have to buy it from the Americans.

So that’s part of why the market has been so stubborn this year, but quite frankly, I think we have a situation where we’re stuck in a range between $3.85 and $3.12, which is extraordinarily high for this time of year and later, but I think it still favors fading short-term rallies. We’ve seen that early during the trading session on Thursday. The market rallied a bit and then gave back those gains to show signs of weakness. With that being said, the market is likely to continue to be noisy. That’s typical of natural gas anyway.

So, with that, I advise caution. I always trade small positions. In fact, most of the time I don’t trade futures at all. I trade an ETF called UNG that follows this market. It’s a lot easier. And if I want to short it, I don’t even short it. I buy puts in the options market. So, there’s a lot of different ways to go about this, but ultimately this is a market that I do think has a lot of overhang.

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