Natural Gas Markets Give Up Early Gains

Natural gas markets have rallied to quickly reach towards the five dollars level as Russian invading Ukraine. However, as it is obvious that natural gas is going to continue to flow through Ukraine, natural gas markets settle down. That is a neat trick, because this is a US contract anyway, so I am not really sure why there is so much of a reaction in the Henry Hub market. All things being equal, the $5.00 level continues to be resistance, and the fact that we have formed a shooting star suggests that we have much further to go to the downside.

NATGAS Video 28.02.22

Looking at this chart, I think the $4.00 level would be the first major target, followed by the $3.50 level below. That was the scene of a significant bounce, and therefore it should have a little bit of support built into it. If we break down below there, then we could drop towards the $3.00 level. This does make sense, because quite frankly we have warmer temperatures coming to the northeastern part of the United States in the next few weeks, and that should drive down demand as well. All things been equal, we have seen the higher prices for the winter in the rearview mirror, and it is likely that we could go much lower.

If we do see the Ukraine gas lines shut down, then we may see another move in this market in sympathy, but that should be a sellable event sooner or later and at the first signs of exhaustion. At this point, I have no interest buying this market.

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