Natural Gas Technical Analysis
Natural gas markets have gapped lower to kick off the trading session on Monday to show signs of negativity. All things being equal, it does look like the $2.75 level is trying to hold as support, but the biggest problem right now in general is going to be the fact that this time of year is typically not very strong. And then, of course, even though there has been some heat in the United States, the supply levels are so full right now that the supply-demand equation doesn’t help the pricing power of natural gas.
Contract Rollover Signals Approaching Seasonal Demand Shift
That being said, we will soon roll over on Wednesday into the September contract, and now we are starting to talk about maybe a little bit more demand coming. I still think we’re some distance away from true demand for natural gas, but we may be coming out of some of the worst part of the year over the next month or two for pricing, and then eventually, we’ll start to look forward to cold weather. Until then, the market is one I look at with suspicion, to say the least.
This is a very seasonal asset, and it’s one that I trade in a seasonal manner. I’m not necessarily comfortable shorting at this point, but I definitely don’t like buying either. Short-term rallies, I think at this point in time, could invite selling pressure because they will be short-lived events, but really, this is more or less a market that’s sitting and waiting, which is fairly normal this time of year.
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