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Christopher Lewis
Natural gas daily chart, November 15, 2019

Natural gas markets have gapped to kick off the trading session on Thursday, showing signs of strength yet again. That being said, there is a gap above that will probably offer quite a bit of resistance near the $2.75 level. Ultimately, this is a market that is cyclically driven as we are getting very cold temperatures in the United States, driving up demand. However, there was a massive amount of drilling done over the last year, so therefore supply is a bit strong still. With that, there is a lot of inventory to work through, but I do think that we are going to do so relatively soon. Quite frankly, winter has arrived early in North America, so it’s only a matter of time before the heating demand catches up with supply, albeit temporarily.

NATGAS Video 15.11.19

To the upside, if we can break above the gap, I think that the market then goes looking towards the recent highs and then the $3.00 level after that. That’s an area that I would anticipate seeing a lot of interest at, and therefore I would be very interested in seeing how it reacts. If we can break above the $3.00 level, and I think we will eventually, the market then will go looking towards the $3.25 level.

To the downside the 200 day EMA should offer support, just as the 50 day EMA should. It’s the wrong time of year to start shorting natural gas anyway, so at this point I think these pullbacks should continue to offer value.

Please let us know what you think in the comments below

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