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Christopher Lewis
Natural Gas

Natural gas markets had initially tried to rally a bit during the week but broke down significantly in order to break below the $2.50 level again. Ultimately though, this is a market that I still think has a lot of buying volume underneath it, but we need to cool off a bit because a lot of the massive move to the upside was due to concerns about the hurricane shutting down production. That being the case, I think it is only a matter of time before we have this pullback as we may have gotten a bit overdone. That being said, I do think that there are plenty of buying opportunities underneath.

NATGAS Video 07.09.20

The 50 day EMA is currently near the $2.10 lower, so I think we could fall that far before bouncing. Quite frankly, the closer we get to the two dollars level the more interested I would be in buying natural gas as seasonality should come into play. Temperatures are going to be dropping in the European Union and the United States, to the biggest consumers of nat gas. At this point in time, I do think that if you are patient enough you should be able to pick up a certain amount of value in a market that has clearly changed his attitude.

Is this the beginning of a major bull market from a cyclical standpoint? Probably not. However, I do think that the market is going to make another run towards $3.00 given enough time. Simply being patient will be the best way to get paid in this market, because I do not believe in shorting, even though I fully anticipate that we are going to drop from here in the meantime.

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

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