Natural gas markets has been going back and forth during the trading session on Friday as it looks like we are starting to run out of steam. That said, the $ 5.50 level below has offered support that appears to extend down to the $ 5.00 level, which will also be backed by the 50-day EMA as it approaches. We’ve seen a lot of momentum upward over the last few months, but at this point we have the question, “who’s left to start buying now?”
NATGAS Video 18.10.21
If we reverse a break above the $ 6.00 level, then we are likely to move towards the $ 6.50 level. The market certainly looks a bit exhausted, but you could also argue that we should continue to see more demand than supply in general. That said, many people are not very aware that this is “Henry Hub Natural Gas”, which means it is very specific to the United States. There are other natural gas contracts out there in places like the Netherlands, but they are much smaller. For what it’s worth, they also trade for 6 times what this is. This is the catch with natural gas, it is a very localized market and therefore you need to be careful about what you are actually trading.
Although there has been a massive decline in the natural gas refinery over the last several months, and we obviously had a massive heat wave this year in the US, it is only a matter of time before supply returns. Although we are currently very tight in supply, the markets have doubled in price over the last handful of months. Momentum begins to wane. However, that does not mean that I am searching too short.
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