The natural gas markets have gapped lower to kick off the Thursday session, rallied slightly, and then fell drastically. This is a market that has just had a major blow off top, and I think we are going lower from here. I recognize that there are areas of support underneath, especially near the $4.00 level. I also recognize that it’s going to be difficult to short this market, but certainly we have gotten so far ahead of ourselves that it makes sense that we pull back to the $4.00 level at the very least. While that sounds rather drastic, when you look at the chart you realize that it’s only about half of the move we have seen recently.
NATGAS Video 16.11.18
There is a certain seasonality to this market right now, as temperatures will be colder in the United States. Quite frankly we had gotten so far ahead of ourselves that commercial suppliers will not hesitate to throw money into the market right now. I believe that we will see a very volatile winter, but I think that once we finally pick up speed to the downside, it’s going to be nasty and the sellers are going to get their revenge. The $5.00 level above continues to be major resistance from a psychological standpoint, and I would have to think that any attempt to get above that level is probably going to struggle a bit, perhaps even fail.