Natural Gas Technical Analysis
The natural gas market has drifted a little bit lower during the trading session on Monday as we continue to see an oversupply of natural gas. This time of year, typically, that is reason enough to send the market lower as it’s not scorching hot in the United States, and the supply is still plentiful. At the same time, obviously, there’s no heating demand.
Furthermore, Qatar looks like it is going to be able to supply the Europeans this winter, so that saves them, and it cuts back on some of the exports, taking some of the pricing power out. With this being said, I think you will see the normal seasonality play out in this market.
Oversupply and Anemic Demand Create Strong Resistance Overhang
Now, that being said, I think we have to understand this is a market that if we do drop from here, the $2.50 level could be the floor. I think short-term rallies may offer selling opportunities here. This is a market that will continue to see a lot of volatility, as the markets are likely to focus on a serious lack of demand.
Ultimately, this is a market that does look like anytime it rallies a bit, there will be an overhang of resistance, maybe the $3 level, possibly the 50-day EMA, but really at this point in time, I think signs of exhaustion are the clue. I do think that most trading will be short-term in nature as the build in natural gas continues, while the demand is just anemic.
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