Natural Gas Markets Have Volatile Opening

Natural gas markets have initially gapped higher to kick off the trading week on Monday, but then turned around to show signs of weakness yet again. To me, the market looks as if it is forming a bit of a topping pattern, which makes a certain amount of sense considering that the temperatures in the United States are starting to drop, as we head into spring. Keep in mind that the Henry Hub contract is highly influenced by weather events in the northeastern part of the United States, so you need to be cognizant of what the temperatures are in places like New York and Boston.

NATGAS Video 01.03.22

Underneath, we have the 50 day EMA which sits at the $4.30 level, followed by the 200 day EMA that sits at the $4.14 level. All things been equal, I do think that we break through both of those, but it does not necessarily mean that the natural gas markets are going to fall apart very easily. I do think eventually the seasonality comes back into the picture, despite the fact that there has been a lot of noise coming out of Ukraine and Russia.

The Americans are not ready to start exporting massive amounts of LNG, so at this point in time it should keep fluctuations to the upside short-term based upon political events. The $5.00 level looks very likely to be the top in the short term, and of course because of this you have to be very careful about going long, but I would be all over shorting signs of exhaustion.

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