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Christopher Lewis
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Natural gas markets have gone significantly higher during the trading session on Wednesday to reach above the $5.50 level, which extends yet even further the massive amount of bullish pressure that we have seen due to a lack of natural gas, especially in the European Union. As there is a serious lack of natural gas for use, it makes quite a bit of sense that we would see a lot of upward pressure. Furthermore, we have recently seen a lot of disruption when it comes to supply, mainly in the southeastern part of the United States as hurricane Ida caused quite a bit of devastation. Previously, we had seen a heat wave in the United States push demand higher as well, so it has been a bit of a “perfect storm.”

NATGAS Video 16.09.21

As economies around the world reopening, the idea of course is significant when it comes to the idea of demand, but at this point I think we are getting a bit overdone. Having said that, I have also thought that for the last couple of weeks. In other words, we are overdue for a significant pullback, so I would be cautious about getting long here. The $5.00 level underneath would be significant support as it is a large, round, psychologically significant figure, and therefore I think it is probably an area that you would see a lot of interest at the market price. Breaking down below the $4.80 level could signal an even sharper pullback, but ultimately this is a market that still looks very bullish, but you simply cannot “chase the trade” up at this level.

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