- In the early hours of Monday, natural gas traders started selling immediately, and at this point as we are getting close to the New York close the buyers haven’t even bothered showing up for the most part.
- At this point, we are closing below the $3.00 level for the first time in several months, but at this point in time we are also looking at the $2.80 level, as it is the bottom of the overall “range of support” the natural gas currently has.
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At this point in time, if we can break down below the $2.80 level, it’s likely that the market will start to fall, perhaps reaching toward the $2.50 level. This does make a certain amount of sense, because this time of year we are typically very bearish. There is a severe lack of demand for natural gas as far as heating is concerned, as the northern hemisphere is warmer than it was just a few months ago. At this point, the other thing that could come into the picture is whether or not we need air conditioning, which as things stand right now, most of North America is actually fairly temperate, meaning that the demand for air conditioning is much lower than it will often be in the month of August. In other words, whether is simply not doing the natural gas market any favors, so it makes a certain amount of sense that we continue to see selling pressure on the whole.
At this point in time, I like the idea of fading rallies as they occur, as rallies that show signs of exhaustion are signals from what I can see. Ultimately, this is a situation where I would love to short the natural gas market again, but the higher the price of the contract when I do it, the better quite frankly. I have no interest in buying natural gas anytime soon.
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