Natural gas markets have done very little during the trading session on Wednesday as they may have gotten a bit overextended over the last couple of sessions. The $2.00 level above is a large, round, psychologically significant barrier, just as the 50 day EMA hanging around the $2.04 level will offer a bit of a barrier as well. Don’t get me wrong, I’m not saying that we can’t go higher than that, but it’s only a matter of time before the sellers come back into the market and push natural gas lower. At this point, natural gas markets are far too oversupplied, and it makes sense that any rally will be squashed, as it has been over the last several months.
NATGAS Video 20.02.20
Looking at the chart, the market sees the $1.60 level as a “bottom” in the market. This is an area where we have bounced from previously, so therefore it’s likely that the market will go below there. That being said, the longer-term cure for natural gas markets will be the bankruptcy of several producers and suppliers out there. Until that happens, oversupply of natural gas will continue to be a major issue. Furthermore, the market has to deal with the warmer temperatures coming, so ultimately that is something to pay attention to. That will only drive demand down further. Longer-term, the natural gas markets are probably trying to find some type of bottoming pattern, but clearly you need to be very cautious about trying to buy this market. At this point it is still more likely to fall than it is rally for a bigger move.