Natural gas markets have fallen again on Monday, as traders are pricing in abundance in supply, as well as warmer temperatures in the USA.
NATURAL GAS
Natural gas markets have shown themselves to be very weak at the moment on Monday as we have broken down below the $3 level yet again. Keep in mind that this is a US-based contract so a lot of people miss the plot when they start to talk about the Qatari gas coming offline as a reason why this might go higher.
That being said, it will eventually influence the US markets but as things stand right now, we are light years away from exports being a major driver. Any short-term rally at this point in time I think continues to be a selling opportunity and I think that extends all the way to the $3.50 level. There is the 50-day EMA between here and there and of course the area just above the $3 level that has been a bit resistant.
Technical Levels and Market Drivers
Breaking down from here, the $2.70 level is your floor, at least in the short term. Anything below there probably opens up a move down to the $2.50 level. Natural gas is abundant and definitely not something that we are running out of here in the United States.
Keep in mind that most contracts you are trading would be based on the Henry Hub natural gas contract which is driven by weather in the northeastern part of the United States more than anything else. There was a story that perhaps artificial intelligence data centers would demand a lot of natural gas but quite frankly those aren't being built very rapidly.
In fact, there's an entire question about a bubble in that area as well. I think until we get through the first couple of heatwaves in summer, any rally at this point in time is probably a selling opportunity at the first signs of exhaustion.