- Natural gas had a rather sharp fall at the beginning of Monday, as we sort of shifted focus to spring and away from our recent cold snap in America.
- Nonetheless, there is some kind of support that we should be aware of underneath.
Natural Gas
Early on in the day on Monday, natural gas was crushed because it appears that there is still a lot of volatility ahead. However, this market has to be considered within the perspective of range-bound nature. We have just touched the lower end of the range so I think sooner or later the selling pressure will almost certainly abate. That being said, you would have to be very aggressive to start thinking about buying natural gas at the moment.
Remember! Also note that recently there has been a huge spike upwards but most of it would have been due to the recent cold snap and not necessarily something more structural or longer term when it comes to natural gas itself. If the US storms are going away, meaning that temperatures could bounce back slightly then logically this will be very bad for natural gas.
Keep in mind, most futures traders are in the midst of trying to price in the idea of spring, and therefore we may have one, maybe two more winter storms that causes a spike like this, but I don't think longer term there's a whole lot to keep the market afloat. Below $2 level lies an obvious psychological support level which will also play its part but really you have a situation where participants have continued looking at this through range bound trading prism. If you’ve been shot in this market, then you probably are looking forward to taking some profit because we’ve actually sold off so far.
In the long run, I don’t expect us to be anywhere anytime soon. From my perspective $2.50 seems like more fair value than anything else can describe it if I were asked. And I still think it’s somewhat magnetized to cost levels. On break below $2 obviously that would be catastrophic; however, I don’t see us coming close to doing so though” It won’t happen. So sooner rather than later, you will probably either see stabilization or buying pressure.
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