Oil & Gas - Energy - Commodities - Resources (OILBRENT)

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Natural Gas Continues to Pull Back
By: Christopher Lewis | March 8, 2024

• The natural gas markets have pulled back a bit over the last couple of days, but during the early hours on Friday we have seen the market stabilized just a bit.

Natural Gas Technical Analysis

You can see that we are somewhat stagnant at this point as the market really ended up being pretty quiet overnight. That being said, I think we are still in the midst of some type of huge consolidation pattern, so it is a bit difficult to get overly aggressive one way or the other right now.

Regardless, this is a market that will continue to pay close attention to the $2 level, which I think will be a bit of a barrier. Breaking above that will attract a certain amount of attention, just as breaking below the $1.50 level would be very attention-worthy as well. Both of these areas have been important in the past, and now that we have sold off so viciously, I think we are in a pattern where we are just simply trying to sort out whether or not the market can turn things around from a longer term swing trade standpoint. Short term trading in the natural gas markets will continue to be very difficult, so therefore, I’m not overly excited about doing that. I look for dips and then add to an ETF position.

The reason I use an ETF is it takes a lot of leverage out of the picture and therefore I don’t have to worry about the day to day swing. If you’re looking to trade natural gas from a day to day standpoint, you are looking to wreck your account to begin with because it’s not really a retail type of short-term setup. But furthermore, you also have to be abreast of what’s going on with weather patterns in the Northeast in the United States. What most retail traders don’t know is that the natural gas contracts they are trading are the Henry Hub natural gas contracts, which are based on US domestic supply more than anything else.

Yes, exterior markets can have an influence, but right now the United States is starting to head into spring, which means demand drops, so I suspect we probably bounce around for quite some time. We may get the last ditch winter storm or we may get a heat wave in the middle of summer to drive up the price, that’s essentially what you’re banking on.

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