Natural gas markets continue to be very noisy, drifting to the downside yet again on Tuesday as the oversupply continues to be a major issue in this market. We would return to the consolidation. Overall, this is a market that I think has plenty of issues longer-term, so I’m a seller in general. The $2.70 level is the bottom of the consolidation area currently, with the $3.00 level being the top of the consolidation area. I believe that the market will stay within these two levels for the foreseeable future. I believe that natural gas suffers from three dollars being far too expensive, because fracking companies begin to make serious money at that point. Alternately, I recognize that the bounces will occur occasionally, but those should be nice selling opportunities. I don’t have any interest in trying to buy natural gas, at least not at these high levels. Overall, I would say that selling the rallies should continue to work. The market obviously seems very comfortable in this range overall, so I don’t see any reason to think that we are going to change anytime soon. With that in mind, I sell rallies and I aim for $2.70. I recognize that there are levels every $0.10 or so that cause major reactions, so think of it as a choppy and range bound market with a downward proclivity.
The hottest months of the year are starting to become a distant memory in the United States, that will also drive down demand, which obviously will be negative for pricing as well. I have no interest in buying anytime soon, but I do recognize that towards the bottom, there should be a nice longer-term opportunity.