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Christopher Lewis
Natural Gas

Natural gas markets have rallied a bit during the trading session on Thursday again, as we start to see demand pick up for natural gas. We are now looking at the November contract, so the prices have adjusted accordingly. We gapped a couple of weeks ago, and now look as if we are reaching towards the $3.00 level, which of course is a large, round, psychologically significant figure. If we break above there, then the market is ready to go much higher.

NATGAS Video 25.09.20

Pullbacks at this point in time will offer value, and the $2.60 level should be thought of as support. Beyond that, we also have a massive amount of support based upon the $2.40 level, so I think that we are a little overbought and you should be looking for pullbacks in order to pick up value. As we head into the colder months of the year obviously demand for natural gas will continue to pick up, and that should drive prices higher. What is worth noticing is the fact that the US dollar has been very strong, but the natural gas markets have been the one commodity that seem to be paying absolutely no attention to it.

Longer-term, I believe that we rally for a couple of months before we start selling off again due to the cyclicality and the seasonality of this market. We have seen a lot of companies go bankrupt, so that of course helps, but there is still plenty of natural gas out there longer term, so this is still a market that will be under pressure next year.

For a look at all of today’s economic events, check out our economic calendar.

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