- I discuss natural gas’s volatile start to the week, noting a gap higher to $4.47 amid shifting U.S. weather patterns.
- I expect a potential pullback before renewed buying, remaining bullish through winter due to strong seasonal demand.
Natural gas markets have shown themselves to be rather noisy in the early hours of Monday, as we gapped higher to reach the $4.47 region and then fell. This is a market that I think is going to be very interesting over the next couple of days because we do have a cold snap in the United States at the moment, and that, of course, has a major influence on the price of natural gas.
But we also have warmer temperatures coming by the weekend, so I think what we're looking at is a situation where we may get a pretty significant pullback. And if we do, I'll be looking to catch that pullback. The best way to do this that I have found in the past has been to wait for a drop and then a bounce. You want to join the bounce because that gives you an opportunity to at least have some momentum to push the market higher.
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I Won’t Short This Juggernaut
That being said, this is a market that I won’t short right now, at least not this time of year, because the demand coming out of the United States will at least be decent, if not strong. Obviously, the temperature fluctuations will move the price around quite a bit, but this time of year, it’s a buy-only market for me. In fact, during the months of late November, December, January, and February, the only thing I’ll do is buy it in this market. The rest of the year, I’m looking for selling opportunities.
This is a very cyclically driven market, although there is talk about how it might be in the process of changing due to AI data centers. But like most things with AI data centers, I think it’s all conjecture at the moment, and truthfully, a lot of speculation on things that people know nothing about. But there is an argument to be made that natural gas demand will pick up because of them. I certainly agree that it’s possible. But as things stand right now, the only thing we know is that when it gets colder in places like Boston, Philadelphia, Pittsburgh, Cleveland, and Chicago, people burn more natural gas.
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