The Gas That Wouldn’t Die

Natural Gas has a way of showing up exactly when investors have written it off. 

That’s been true for decades, and it might be happening again right now. 

After spending years in the penalty box, the commodity is trading at the highest level since 2022, at the exact moment it’s supposed to be weakest.

And when something moves this aggressively against its own seasonal tendencies, that’s the market telling us something bigger is happening.

There’s been a lot of chatter lately about AI reshaping the energy landscape, and while it’s hard to know how much of that is narrative versus true structural demand, the timing is hard to ignore. 

AI is blowing out power curves across the grid. 

It’s forcing utilities to rethink baseload generation. 

It’s accelerating timelines for firm, dispatchable power sources. 

Whether or not that’s the direct cause of this breakout is anyone’s guess, but the price action is speaking louder than any fundamental story. 

And if the market is front-running something in the background, whether it's grid demand, LNG flows, or a shift in global supply chains, it’s showing up in the charts first.

Let's run through the charts.

First, let's start with Natural Gas's seasonality.

With data going back to 1991, December and January are historically the worst months on the calendar on average. 

But this is why seasonality is never a tool for decision-making... 

It's something we look at after the fact. 

If something is supposed to be weak and it collapses, that tells us nothing. 

On the other hand, when something is supposed to be weak but rallies instead, that’s one of the most powerful signals markets can give. 

Natural Gas is doing precisely that. The contract is ripping during the period when it normally sinks. 

More importantly, Natural Gas futures have resolved a massive base.

After a historic post-COVID rally, Natural Gas futures suffered a drawdown of over 80% from August 2022 to February 2024. It was nasty!

Since bottoming, the price has carved out a textbook bearish-to-bullish reversal pattern, which is being resolved in real-time.

So long as the buyers hold the breakout, the path of least resistance is higher toward the 2022 peak. In other words, we think it could double from here.

We want to own Natural Gas futures above 4.90, with a target of 6.75 over the coming 2-4 months. Over longer timeframes, we're looking at a secondary objective of 10.

And it’s not just the futures... 

Natural Gas stocks are making new multi-month highs.

The First Trust Natural Gas ETF $FCG is our preferred vehicle for tracking the performance of Natural Gas stocks at an industry group level.

After a historic rally off the 2020 lows into mid-2022, the group has spent years grinding sideways, frustrating everyone who tried to trade it. 

Then it delivered a classic shakeout in April, just enough to eject weak hands and reset positioning, before snapping right back into its range. 

Since then, it has done nothing but coil and build up energy. 

It’s a coiled spring inside a coiled spring, and now the underlying commodity is breaking out right as FCG pushes into the top of its range.

We aren’t quite at the breakout yet, but we’re close. 

And if FCG resolves higher the way we expect, it’s going to unlock a wave of leadership in the Natural Gas stocks. 

For our Commodities Trade of the Week below, we’ve identified several names showing relative strength. These are the names that will lead the next leg higher. 

What are you seeing in commodities? Let us know what you think. We love hearing from you!

Commodities Trade of the Week

This week, we're highlighting two of our favorite Natural Gas stocks that look poised to surge higher from here.

Premium members can see the entry and target levels below. 👇