- I’m bullish on natural gas as we roll into the December contract, which begins the winter demand season.
- I’m looking for buying opportunities on pullbacks, especially near $3.60, expecting strength through the coming months.
The natural gas market has gapped higher to kick off the trading session here on Wednesday as we are rolling over into the crucial December contract. The December contract is the beginning of winter, and these three months, December, January, and February, are some of the better-performing months for natural gas as traders start to focus on heating concerns in places like Cleveland, Pittsburgh, Philadelphia, and New York. As temperatures drop, demand rises, it pulls more supply out of the pipeline, and prices elevate.
Repeat of Last Month?
I think at this point in time, we could see a little bit of a repeat of what we saw last month as we rolled over into the November contract. We had a nice gap, a little bit of a rally, we filled that gap and then took off to the upside again. Keep in mind that this time of year is very bullish overall, so I don’t really look for short setups, and I do think the next couple of months is a good place to be in the form of being bullish and buying natural gas. Sooner or later, we leave the winter months, and I start selling again, but we are quite some distance from that. We’re probably going to have a couple of months of bullish behavior. So, at this point, I look at each and every pullback as a potential buying opportunity.
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The $3.60 level has been support and resistance in the past, so a pullback towards that area starts to get me interested in buying again because I don’t really like chasing it this far. I don’t want to buy this at 45 cents higher than it was the day before, when we were getting ready for the rollover, and therefore, a little bit of patience probably goes a long way here, especially as the cyclical trade is so well known.
We may get a little bit of warmth that might put a little bit of negativity into natural gas, and that’s exactly what you want to see because shorting has all been impossible in an environment that I think probably has natural gas trying to reach the highs of last year, as far as winter is concerned, March of this year. So, I’m for it. I’m looking for pullbacks to get involved and a little bit of a bounce to show confirmation of the resumption of the trend.
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