This morning’s price action in natural gas dropped over 4% despite last week’s draw of 228 billion cubic feet against analysts’ expectations of 222 billion cubic feet and 144 cubic feet the prior year.

natural-gasThe only catalyst worth mentioning is that the heating demand will begin to taper off with coldest part of winter behind us now. Traditionally the heating demand for winter is from November to March and with weather reports showing warmer weather across the country this week it’s no surprise natural gas is beginning to rollover.

Technicals are suggesting a mover lower as well, with the price breaking below the short-term uptrend trendline. The MACD is suggesting a across over shortly and price action is now below the T3 Tilson. And although we won’t have conformation until the close tomorrow we are likely looking at lower high as well.

With near term support at $2.64 only 7.3 cents from its 52 week low of $2.567 we easily could be looking at push below this level.

Bottom Line: Time to be neutral to bearish on natural gas. If the bears are looking to take natural gas lower this week we could be looking at another 5-6% mover lower in the natural gas ETF (UNG, quote).

Thursday’s natural gas inventory number could be the final piece of the puzzle.


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