Natural Gas Markets Continue Underwhelming

Natural gas markets have been very noisy during the trading session on Friday as we continue to go back and forth just below the $5.00 level. This is a market that will continue to be thrown around by the latest weather report coming out of places like New York and Boston. Ultimately, we are getting close to the end of winter and although there was a nasty winter storm recently, the reality is that the markets will continue to look at this through the prism of the next seven days or so. That being said, we are getting close to a time frame when the weather starts to warm in those areas, thereby causing demand to plummet.

NATGAS Video 07.02.22

At this point, if we break down below the Friday low, I think it is probably going to start to sell off again, perhaps reaching down towards the 50 day EMA initially, followed by the $4.00 level, and then the $3.50 level. I do not necessarily believe that it is time to get aggressive quite yet, but I do see a selloff coming. Because of this, it is very likely that we will continue to see noisy behavior, but I still believe that it all favors the downside. In this scenario, I fade short-term rallies and sell breakdowns.

Remember that we are trading the month of March, which is traditionally a very major shift in demand, as temperatures start to pick up. If that is going to be the case, I think it is very likely that we are to see more downward pressure over the next couple of weeks. I plan on jumping in front of that trade.

For a look at all of today’s economic events, check out our economic calendar.