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Christopher Lewis
Natural Gas

Natural gas markets have exploded to the upside during the trading session on Monday, perhaps in reaction to the Sunday bankruptcy filing of Chesapeake Energy, the largest fracking company in the United States. This is a massive move to the upside for a market that has been very choppy in negative for what seems like a lifetime. In other words, the bankruptcies are starting and therefore it should continue to see supply dwindle in, something that natural gas markets desperately need to see. If that is going to be the case, it is likely that we will find plenty of buyers based upon a dwindling supply. That being said, we are a long way away from chew through the inventory, but this could be the beginning of a bit of true fundamental support for natural gas markets.

NATGAS Video 30.06.20

Looking at the downside, you can see that the $1.56 level has offered support a couple of times now, forming a major “double bottom”, at least from what I can tell so far. It does make sense, because this is a level that has been crucial on more than one contract over the years. Ultimately, I do think that we are trying to put a bit of a bottom, and therefore I like the idea of buying pullbacks at this point, at least until we would break down below the $1.50 level. However, you cannot buy it right away, because you would be simply chasing the trade, which is a great way to lose money. I do think that we will get a little bit of a pullback, but the pullback should offer a nice buying opportunity.

For a look at all of today’s economic events, check out our economic calendar.

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