Natural Gas Markets Give Up Early Gains

Natural gas markets spiked during the trading session on Tuesday to reach towards the bottom of the gap above, but then pulled back a bit during the course of the session showing just how frail this market is over the longer term. The shape of the candlestick suggests that we are going to continue to see sellers on rallies, just as I had been thinking. Ultimately, we had a cold snap hit the northeastern part of the United States yet again, but it is simply a short-term catalyst, as you can see based upon this chart. I think at this point in time it is only a matter of time before we break down below the $4.00 level, and then go looking towards the $3.50 level.

NATGAS Video 16.02.22

Natural gas is abundant, and even though there are some issues in the European Union, that has very little to do with what goes on in this contract. The market will continue to see a lot of volatility, but all things been equal I think you have to continue to look at this is a market that you can only sell. The rally should be thought of as gifts, as we have seen during the session on Tuesday. You should also keep in mind that the top of the gap is closer to the $4.57 level, which is an area that I think could cause some struggles. The markets will continue to be very noisy, but at the end of the day the $3.50 level underneath looks to be a bit of a magnet for price.

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