Natural Gas Technical Analysis
The natural gas market has fallen pretty significantly right off the bat on Monday. The market has seen quite a bit of significant pressure, but we continue to stay in the same range that we have been in. After all, this is a market that has a flat 50-day EMA, and we have seen a significant amount of resistance at the $3 level, right along with a significant amount of support near the $2.75 level. In general, this is a market that I think remains very back and forth as shoulder season is a major factor.
“Shoulder Season” Is Here
Shoulder season is essentially between high demand. In the summertime, we get high demand occasionally due to heat waves. In the wintertime, we get it due to heating needs in places like New York City, Cleveland, Pittsburgh, etc. Right now, we are just kind of stuck between the two.
However, here at the end of the month, we will roll over into the new contract, which is November. That is a bit more demanding of natural gas, but we will have to watch the weather. The biggest problem that we have right now is that natural gas storage is about 5% to 7% above its five-year average. We have plenty of natural gas in the U.S., and that is why we will not really budge.
I suspect at this point in time, it is going to remain range-bound, at least in the short term. Longer term, I do think the buyers come back. Wintertime is a seasonal phenomenon, but right now, I keep my expectations somewhat limited.
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