Natural gas continues to rally during the Thursday session as we are now in the July contract in the futures market, and perhaps we're starting to think about the possibility of hot weather.
That would make a certain amount of sense. Perhaps giving us a higher floor, but this is still a market that I look to fade on signs of exhaustion.
Warmer weather is coming, that's part of what's going on here, but we are light years away from tearing down the massive amount of supply that we have in the US.
Supply Overhang and Resistance Barriers
Furthermore, we have the 200-day EMA at the $3.27 level offering a potential resistance barrier, and as a result, I think a lot of traders will be looking for signs of exhaustion in the natural gas price to start shorting, because let's be honest, natural gas isn't exactly scarce in the US.
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And, of course, there are some concerns in the Middle East as far as Qatari liquefied natural gas, and that should boost European imports of US liquefied natural gas, but really at this point in time, it's not the time of year to worry about that. A little bit later in the year, we will certainly see that come into play, but as things stand right now, this is a market that I'm still looking for signs of exhaustion that I can start fading.
The $3 level probably offers a little bit of support if we start to fall. If we break down below there, the $2.60 level could be targeted. We'll just have to wait and see. Obviously, this is a fluid situation, but generally speaking, this time of year is a bit lackluster for natural gas.
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