Natural gas markets were very choppy during trading on Thursday, with the market hovering just below the beginning of a resistance barrier. The resistance barrier is very significant, and I think that between here and the $3.10 level there is going to be a significant amount of selling pressure. This is because fracking is very profitable at the $3.00 level, and therefore it offers a lot of supply in the market, driving prices down. At this point, I would not be a buyer even though we are obviously very bullish recently, I think at this point it’s likely that we continue to see a push higher, followed by a bigger selloff. With that in mind, I think a lot of patients will be needed to find your trading opportunity.
I believe that there is going to be a ton of selling pressure at the $3.00 level and extending to the $3.10 level. The alternate scenario is that we drop below the $2.90 level before we get there, and then at that point I think the sellers would come back in and really start to push things. If we did somehow break above the $3.10 level, at that point I think the market would probably go looking towards the $3.40 level which has been massive resistance in the past as well.
Regardless of what’s about to happen, I think the one thing you can count on is a lot of volatility which is typical for this market. As I record this, it does look like we are trying to pick up a little bit, but at this point I’m only thinking about punishing the first signs of weakness.