- The natural gas market has been experiencing downward momentum as we head into the spring season for the Northern Hemisphere.
- With heating no longer a major driver of demand, it is expected that demand will continue to drop during this time of year.
- This has resulted in a negative outlook for the natural gas market.
The $2.00 level is expected to offer some support to the market in the short term. However, it is not guaranteed to be overly supportive given the current state of the market. The natural gas market is experiencing toxicity due to the warmer temperatures and concerns about a potential global economic slowdown. Industrial usage is expected to fall off, leading to a potential drop in the price of natural gas.
Rallies in the market are expected to face significant resistance. The $3.00 level is a psychologically significant figure that will attract options barriers and traders, making it more likely that any rally towards that area will face selling pressure. Traders should be prepared to short the market on any rally and signs of exhaustion as there is currently nothing to support a rise in the market.
A Big Rally May Occur Later This Year
Adding to the negativity in the market is the fact that Freeport is operating at full steam to supply the European Union with liquefied natural gas. However, the winter in the European Union was not overly cold, and Europeans were able to get through the winter without draining their natural gas reserves. This may lead to a longer-term structural problem for the natural gas market.
Looking ahead, it is possible that a big rally may occur later this year. However, at this point, it is likely that the market will continue to try to find a range between the $2.00 and $3.00 levels. Traders should continue to monitor the market closely and be prepared to act accordingly based on market trends and developments.
At the end of the day, the natural gas market is experiencing downward momentum as we head into the spring season for the Northern Hemisphere. The $2.00 level is expected to offer some support to the market in the short term, but the market is currently experiencing toxicity due to warmer temperatures and concerns about a global economic slowdown. Traders should be prepared to short the market on any rally and signs of exhaustion as there is currently nothing to support a rise in the market.
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