Natural gas markets initially trying to rally during thin trading on Wednesday but turned around at the $2.89 level to reach towards the $2.85 level in the abbreviated volume. I think that the market is probably going to continue to go lower, so at this point I think that it’s only a matter of time before the sellers continue to push this market lower. If we can break down below the $2.85 level significantly, the market probably goes down to the $2.80 level next, and then eventually the $2.70 level after that. I think rallies are to be sold as the longer-term fundamental certainly are negative for natural gas, and as the heatwave in the United States is getting close to being over, that should drive down a bit of demand as well.
Further compounding the situation is that the US dollar has been strengthening longer-term, so I think that it’s only a matter of time before the currency comes into play as well. I think that the market has a massive “ceiling” at the $3.00 level, which is an area that should continue to be very important for the longer-term. Short-term buying could be possible above the $2.90 level, but at this point I think it’s probably safer to simply wait for some type of exhaustion above to take advantage of. Longer-term, the $2.60 level is the bottom of the overall consolidation area that has been a major feature of this market for quite some time.