Natural Gas Price Outlook – Natural Gas Recognizes Spring

Natural Gas Technical Analysis

The natural gas markets have gapped lower to kick off the trading week, as we continue to see people focus on the idea of spring. After all, demand is going to fall off of a cliff soon. And therefore, it’s difficult to get overly aggressive despite the fact that we had just seen a major shot higher. Most of what we had seen shoot higher, I think, was driven by the idea that perhaps the cold temperatures in the United States would, in fact, drain some of the storage. And that’s true, but the cold temperatures are coming to an end.

In fact, it is going to be 50 degrees here in Ohio today, which I believe in — I have to do the math conversion — but it is roughly 10 degrees Celsius. So, it’s not freezing cold, and of course, the rest of the northeastern part of the United States will be very much the same.

So, with all of that being said, it does make sense that demand drops very quickly. Keep in mind also that we are getting ready on the 26th, two days from now, to roll over into the April contract. I think at this point in time, there’s a very real shot that the winter rally is over. And if that’s the case, I start to focus on the downside. I will start shorting. You have to do it very carefully because natural gas, of course, is very volatile and can go against you very quickly. But I think we’ve got a situation here where you could very well see this market drop quite a bit. I am now negative on this market.

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