Natural gas markets have rallied a bit during the trading session on Wednesday, but quite frankly we have a long way to go before we change the overall attitude of this market. With that being the case, I think this is a scenario where we need to see natural gas prove itself, and by that, I mean take out the 200 day EMA at the very least. There was a major gap lower to get us here, as temperatures in the United States continue to look more on the mild side for the winter.
NATGAS Video 09.12.21
Because of this, natural gas demand is projected to fall off of a cliff, which should not be a huge surprise considering that the United States is so oversupplied from a structural standpoint. Furthermore, there is also talk of a slowdown globally, which in and of itself would more than likely work against demand as well. At this point, I am simply waiting for some type of rally that shows signs of exhaustion, so that I can get involved and start shorting again. We have seen the peak for the winter, barring some type of massive disruption, and the massive triangle that I have drawn on the chart suggests that we could be going as low as $3.00. I fully believe that based upon what I am seeing now.
To my friends in the European Union and Asia, keep in mind that this chart is based upon the US contract, so while you trade at a broker that offers natural gas, your prices in the real world will be a lot different. Because of this, you need to be cognizant of weather patterns in America to be successful at this.
For a look at all of today’s economic events, check out our economic calendar.