You’re looking at a chart for the natural gas continuous contract and something feels off. Maybe there's a massive gap in price that doesn't align with the news, or perhaps the long-term trend looks like a slow-motion car crash even when demand is spiking. It’s frustrating.
Natural gas is a beast.
If you’ve spent any time staring at the Henry Hub ticker on TradingView or a Bloomberg terminal, you’ve likely realized that "spot price" and "continuous contract" are two very different animals. One is what’s happening right now at a pipeline header in Erath, Louisiana. The other is a mathematical construct—a "stitched" version of various futures months designed to give us a long-term view of a market that technically expires every 30 days.
Why the natural gas continuous contract acts so weird
Futures contracts have an expiration date. When the prompt month (the one closest to today) expires, the "continuous" chart has to jump to the next month.
This creates a problem.
In a "contango" market—which is the default state for natural gas more often than not—the next month is more expensive than the current one. When the chart rolls over, it looks like the price suddenly spiked. But it didn't. Your position didn't gain value; the chart just shifted its yardstick.
Honestly, if you don't account for "roll yield," looking at a 10-year chart of a natural gas continuous contract is basically an exercise in fiction. You see these massive mountain peaks and valley floors, but a buy-and-hold investor would have been eaten alive by the cost of rolling those contracts forward. This is why ETFs like UNG (United States Natural Gas Fund) often lose value over the long haul even if gas prices stay relatively flat. The "roll" is a silent killer.
The Henry Hub connection
Everything in the North American market revolves around the Henry Hub. It’s a physical intersection of nine interstate and four intrastate pipelines. When you trade the natural gas continuous contract, you are essentially betting on the value of fuel delivered to this specific point in Louisiana.
But here is where it gets tricky: basis risk.
Just because the continuous contract says gas is $2.50 doesn't mean it costs $2.50 in Appalachia or West Texas. In the Permian Basin, for example, gas prices have famously gone negative—producers were literally paying people to take the gas away because they had too much of it as a byproduct of oil drilling. The continuous contract doesn't always show that local pain. It reflects the broad, national benchmark.
Understanding "Generic" vs. "Adjusted" contracts
When you pull up a chart, you're usually looking at what’s called a "Generic 1" (front month).
Some platforms offer "Back-Adjusted" or "Panama-Adjusted" charts. These are the ones that actually matter for technical analysis. A non-adjusted natural gas continuous contract chart is full of "price gaps" that aren't actually gaps in trading—they’re just the difference between the January and February contracts.
If you try to use a Gap-Fill strategy on a non-adjusted futures chart, you’re going to lose money.
The market isn't "trying" to fill that gap. The gap is a structural reality of time and storage costs. Natural gas is expensive to store. Unlike gold, which you can shove in a vault and forget about, natural gas requires massive underground salt caverns or depleted aquifers. That storage cost is baked into the "carry" of the futures curve.
Weather is the only god that matters
You can talk about the Federal Reserve or the dollar index all you want, but for the natural gas continuous contract, the weather forecast is the ultimate arbiter of truth.
I've seen traders lose their entire accounts because of a "warm" ridge over the Midwest in December. The "Widowmaker" spread—the difference between March and April contracts—is legendary for a reason. It represents the bet on whether we will run out of gas before winter ends. If the "continuous" chart is showing a massive premium for winter months, and then a 14-day forecast shows a "blowtorch" (unseasonably warm weather), that premium evaporates in minutes.
It’s violent.
The role of LNG and the global shift
A decade ago, the natural gas continuous contract was a domestic story. It was about US shale production and US weather.
That’s over.
With the massive expansion of LNG (Liquefied Natural Gas) export terminals like Cheniere’s Sabine Pass, the US is now connected to the world. Now, a cold snap in Berlin or a strike at an export facility in Australia can send the Henry Hub continuous contract into a tailspin or a moonshot. We are exporting roughly 14 billion cubic feet per day (Bcf/d) now. That’s a huge chunk of total production.
Basically, the continuous contract is now a proxy for global energy security.
Why data lags can ruin you
If you're trading based on the EIA (Energy Information Administration) weekly storage report, you're playing a high-stakes game of poker against computers that can read a PDF in milliseconds. The storage report comes out every Thursday at 10:30 AM ET.
The volatility in the natural gas continuous contract at 10:30:01 AM is insane.
If the market expects a 50 Bcf withdrawal and the EIA says 40 Bcf, the price will crater. It doesn't matter if 40 is still a "good" number; it’s about the delta between expectation and reality.
Technical Analysis on a Continuous Basis
Can you actually use RSI or Moving Averages on a natural gas continuous contract?
Yes, but with a huge caveat.
You have to use a "continuous" stream that accounts for the roll. If you don't, your moving averages will be skewed by the price jumps at the end of every month. Many professional traders prefer to look at the "Strip"—the average price of the next 12 months of contracts—rather than just the front-month continuous contract. The strip gives a much smoother, more realistic view of where the industry thinks prices are headed.
Inventory and Production: The two pillars
- Production: Keep an eye on the "lower 48" production numbers. We’ve been hovering around 100-103 Bcf/d. If that pushes to 105, the upside for the continuous contract is capped regardless of how cold it gets.
- Storage: The "5-year average" is the baseline. If we are 10% above the 5-year average, the natural gas continuous contract will struggle to maintain any bullish momentum.
Practical steps for navigating the market
Don't just open a chart and buy the dip. Natural gas can stay low longer than you can stay solvent. If you’re going to use the natural gas continuous contract as a tool for trading or hedging, you need a process.
First, identify which "flavor" of continuous contract your platform is showing you. If it's a "front-month" only chart, ignore the price gaps at the end of the month. They are hallucinations.
Second, check the "Contango" or "Backwardation" of the curve. If the next month is 10 cents higher than the current month, you are losing 10 cents every time you roll your position. That’s a massive headwind.
Third, get a reliable weather source. Don't rely on the local news. Look at the GFS (Global Forecast System) and ECMWF (European Centre for Medium-Range Weather Forecasts) models. These drive the algorithmic buying and selling of the natural gas continuous contract.
Finally, watch the LNG feed gas flows. If the pipelines going to the export terminals are full, the price has a floor. If those terminals go offline for maintenance, that gas stays in the domestic market and prices collapse.
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The natural gas continuous contract is a powerful tool for understanding energy macroeconomics, but it requires a level of nuance that most "set it and forget it" investors simply don't have. Treat it like a living organism that reacts to the temperature, global politics, and the sheer physical difficulty of moving molecules through a pipe.
To get started with actual data, track the weekly EIA storage reports and compare the "actual" versus "consensus" numbers. This will teach you more about the price action of the continuous contract than any textbook ever could. Observe how the price reacts to the "implied flow" versus the actual storage change. Over time, you’ll start to see the rhythm of the roll and the reality behind the chart.