Natural gas markets initially tried to rally during the session on Thursday but found the $2.75 level a bit too much to overcome. It looks as if we are going to continue to go lower, perhaps reaching towards the $2.65 level. I think at this point, it’s a matter of selling rallies more than anything else. The $2.80 level above is massive resistance, and I think it would be very difficult to break above that level. If we did, it would obviously be a major change of attitude in the market. I believe that the market participants will continue to see a lot of opportunity to the downside, as teachers have shot much higher in the united states, driving down overall demand. With this in mind, I am a seller at the first signs of exhaustion, but if we broke above the $2.82 level, it’s likely that we could get a short-term buying opportunity, and perhaps scalpers would love it.
I think that there is a massive amount of support at the $2.50 level, which is extensively the “bottom” of current market conditions. I think that there is an entire zone between the $2.50 level underneath, extending to the $2.60 level. That area will be very difficult to break down through, so I anticipate that we will continue to find short-term bounces that we can take advantage of to the downside as the oversupply of natural gas will be a longer-term issue.