- The natural gas market showed a positive shift in Monday's trading session, surpassing the 50-Day EMA.
- It's likely that this upward trend will persist and push toward the $3.00 mark in the long run.
- This rise is supported not only by the ongoing heatwave in the United States, prompting increased demand, but also by broader factors indicating future growth.
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A key factor to consider is the influence of various factors on natural gas markets. While US weather plays a significant role, the situation in the European Union adds complexity. The shutdown of the Russian natural gas supply due to ongoing issues like the conflict in Ukraine and the disruption of the Nordstream II pipeline, because of actions by the Biden administration, contribute to the upward trajectory of the natural gas market.
Efforts by Norway to bridge the supply gap are noteworthy, but the situation is further complicated by the political upheaval in Niger, which poses a threat to the trans-African pipeline. As a potential solution for the European Union, this pipeline's uncertainty adds another layer of support for natural gas prices. Likely, Europe will turn to purchasing liquefied natural gas from the United States, a move that will significantly impact this market.
Remain Attentive
Personally, I am not considering shorting natural gas at this point. The cyclical nature of the market, driven by heating demand, makes shorting less attractive. Looking ahead, breaking the $3.00 level could open the door to aiming for the $5.00 level, which is my target over the upcoming winter months. As the colder seasons approach in the northern hemisphere, the demand for natural gas will increase to heat homes and power various industries.
For now, I am adopting a cautious approach by building a solid foundation with a non-leveraged position. The current phase involves a waiting game as the market dynamics unfold. It's important to remain attentive to the evolving situation and be prepared to make informed decisions based on emerging trends and shifts in the natural gas market. Furthermore, I am deciding to keep my position smaller, and simply add as we go along. The market remains one that is a “buy on the dips” scenario, and therefore I am adding from time to time. I think that once we finally break $3.00, this market will roar.
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