One of the trickiest things about trading natural gas is that it tends to be very erratic. However, if you look at the longer-term charts you can often make more sense of what’s going on, and while the momentum traders have jumped in on Thursday to push this market towards the $2.77 level as I record this, there is a significant amount of resistance near the $2.80 level, and I think that the sellers will probably come back in to the market in that area. However, if we break above the $2.82 level, then the momentum will most certainly send this market looking towards the $3 level above.
I think that the $3.00 level above is going to be massive resistance and I would be quite surprised if we can break above there. At that point, I would become much more aggressive in my selling on signs of exhaustion. However, in the meantime I think that we are overbought and it’s only a matter of time before the sellers return. This is why I don’t think we break above the $2.80 level and the short-term, as this move has been too quick. Quite frankly, the storage number wasn’t bullish enough to change the longer-term outlook for this market. The cold is gone in the United States and although we are lower with storage than people are used to, it’s only a matter of time before that gets refilled.