- Natural gas markets continue to struggle, as we initially tried to gap higher on Tuesday, but then found the $3 level to be a bit too much to get above.
- This is a large, round, psychologically significant figure that a lot of people would be paying close attention to, and I think it’s not too much of a surprise that we had seen some selling in that neighborhood.
Markets falling the way they have suggest that natural gas demand is still a major problem, and of course we have to pay close attention to whether or not we break down. The $2.85 level is an area that I will be watching closely, and anything that goes below there opens up the possibility of a bigger drop down to the $2.40 level. That being said, if we were to turn around and break above the $3.20 level, then the market is likely to go looking at the 50 Day EMA.
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Natural Gas Demand
The biggest problem that natural gas will have right now is that the lack of demand is a very real thing. After all, we have seen temperatures being fairly stable in the United States, and it makes a certain amount of sense that prices are fairly low. After all, natural gas is traded as a primarily American market and depending on what the temperatures are doing in the United States, this will determine where natural gas goes.
As things stand right now, there’s not much demand for heating obviously, and the heat in the United States has been somewhat bearable, so air conditioning demand has probably dropped as well. Furthermore, if we do in fact see the US economy slow down, demand for natural gas to produce electricity will probably fall off a cliff as well. I think that’s what the charts are telling us at the moment, and therefore any time we rally, I’ll be looking for signs of exhaustion to start selling yet again.
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