Natural gas continues to see plenty of noise during the early part of the trading session on Thursday as the sellers have re-emerged to show a real desire to keep prices suppressed at the moment.
This is not a huge surprise, quite frankly.
The overall attitude for natural gas this time of year is quite often pretty poor as there is plenty of supply and, more importantly at this point, a serious lack of demand.
With that being the case, it makes sense that traders continue to use the natural gas as a market that is somewhat negative, and they jump in to short when the market gets a little overdone, like it did during the previous session on Wednesday.
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Support Levels and Seasonal Outlook
At this point, we are still very range-bound, and I look at the $2.65 level as significant support, still waiting to see whether or not we can continue to go back and forth in the intermediate term. But I also recognize that traders will be looking at the upcoming switchover into the October contract as a potential reason for buyers to re-enter.
Ultimately, this market is one that is very cyclical and seasonal, and that is the overall thesis that I tend to follow year after year.
That being said, there is a little bit of difference this year in the sense that there are concerns about natural gas coming up from Qatar to the European Union. If that ends up being a problem, then the gas will almost assuredly come from the United States, and that could make the action in the wintertime much stronger. This is still driven by geopolitics, but as things stand right now, it's more or less paying attention to the massive amount of storage that we have in the US.
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