Natural gas has been steadily bouncing between a price range between $2.50 and $3.00 but faces a major supply problem in the upcoming spring season. Natural gas prices are weaker in the spring season, which means it will face an uphill battle to trade higher.

Spring Time

During spring, people do not use air conditioners or heaters for their homes so the demand for natural gas drops and stockpiles start to build up, causing the price of natural gas to decrease. That is not a good thing considering that the price of natural gas has broken through the $3 price range.

The next area of support is around the $2 area – a price range that should hold, however, with additional supply coming to market that may not be so easy.

Trading Natural Gas

Putting aside how much the weather will affect the price of natural gas; traders will also look to the technicals, which have seen prices trading in a range between $2.5 and $3.

Giving that $2.5 level is the support line if natural gas closes below that, then it could potentially drop more and test around the $2 area.

The main issue with the price of natural gas would be to determine the next weather pattern. That is because the most recent EIA report, which was released last week on February 23rd, stated that stockpiles for natural gas didn’t decline as expected.

The EIA reported that stockpiles had declined by $89 billion cubic feet for the week ending February 17, 2017. Analysts were expecting an even greater decline of natural gas by $112 billion cubic feet. This decline was good but it was not enough to counter the excess inventory supply into the market.

The next report for natural gas is going to come out on Thursday, and that will dictate how natural gas will trade for the rest of the week.

What Binary Options Traders Should Watch For

There a few items traders should be on the lookout for. The first of which is the weather forecast. It is quite likely that the month of March will have mild weather, meaning natural gas will not be in demand, however, if a cold March is on the cards then we will see an increase in demand.

Secondly, the technical levels – traders should be on the lookout for the support prices. Natural gas must remain above the $2.50 level to be in a bullish position.

Resistance is currently at the $3 mark and a break-through will only happen if the supply levels decrease and demand increases.

The final thing that traders need to look at would be the new EIA report due out on Thursday. That will be the main driver for the price of natural gas for the next few days.