Natural Gas Breaks Lower, Eyes November 2013 Low

natural gas stoveNatural gas traders are left wondering what is in store for prices this winter following a bitterly cold and bullish winter for the eastern U.S. in 2013-2014, followed by a very mild and bearish summer of 2014.

Will a similarly brutal winter ensue, sending Natural Gas prices sharply higher again in 2014-2015?

I won’t pretend to be a meteorologist, but some will point to the Farmer’s Almanac prediction of another harsh winter, while others look to the NOAA/National Weather Service forecast. NOAA sees more seasonal temperatures across the eastern two-thirds of the country, with perhaps some below normal temps only in the Deep South, but also above normal temperatures in New England and across the northern plains (h/t to @etiviti for the NOAA graphic).

NOAA Winter Outlook

NOAA winter weather forecast 2014-2015

 

Now let’s take a look at the chart of Natural Gas spot prices itself. In the chart below, we can see that it just recently broke below a trading range. Natural Gas had a similar pattern in March through June this year. When that range broke, the 3.80 level was targeted. The bearish mild summer dropped prices into a new trading range that persisted from July through early October. The latest leg lower would signal continued weakness as it breaks away from the 3.73-4.18 bear flag. The bear flag continuation pattern would complete near the 3.40 level, which coincides with the November 2013 low.

Natural Gas Price Chart

natural gas prices technical support chart winter 2014

 

Follow Mike on Twitter: @MikeZaccardi

No position in any of the mentioned securities at the time of publication.  Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

 

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