The natural gas market initially tried to rally during the trading session on Wednesday but has since fallen, showing signs of hesitation.
Ultimately, this is a market that will remain noisy in general and is currently watching a lot of different things, not least of which would be the energy situation in the Middle East.
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The war has had a lot of people concerned
The flow of natural gas into places like the European Union from Qatar is a major factor. That being said, this is a U.S. contract, so the real question is going to be whether there is more demand for natural gas coming out of the United States as exports to places like Europe increase.
The seasonality of this market should not be forgotten. It is one that is almost always pays attention to the overall heating demand coming out of the northeastern part of the United States, which is a major driver of consumption. Therefore, the later we get in the year, the more likely it is to see some bullish pressure.
That being said, we do not have it quite yet, and it is worth noting that we have quite a bit of storage at the moment. As long as that supply is still out there, natural gas might struggle to truly take off.
The 50-day EMA currently sits at the $2.92 level, and underneath there we have the $2.80 level, which was the bottom of the overall consolidation that we had just broken out of. The question now is whether we are going to see some type of breakout, pullback, and retest to continue to the upside, or if we are going to drop.
I think at this point you have to watch weather and storage. Those are the two big stories here, and then whether there is any attack on Qatari pipelines. I am somewhat neutral at the moment, but I am starting to lean more bullish than bearish.
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