Natural gas markets have rallied a bit during the trading session on Wednesday, reaching towards the $2.25 level. At this point, the market looks very likely to continue grinding higher, but I think at this point we desperately need to see some type of pullback in order to risk any trading capital. The $2.00 level should offer a significant amount of support now that we have broken out of that previous consolidation area, and with the tropical storm that has been threatening the natural gas production in the United States, it makes sense that we would continue to see higher pricing.
NATGAS Video 06.08.20
Furthermore, there was a lot of demand over the summer due to the fact that there had been massive heat, and of course a lot of bankruptcies out there in the United States. With that being the case, I think it is only a matter of time before natural gas continues to go higher and I think we may have just formed the longer-term base for the trend reversal heading into the colder months of the year.
The front month for natural gas right now in the futures market is the September contract, and that is generally when temperatures start to drift a little bit lower. With that being said, I think that natural gas has suddenly turned into a “buy on the dips” type of marketplace. Longer-term, I think we are going to try to get to the $3.00 level. In the short term though, it will probably continue to be volatile and we are most certainly a bit of her stretched at this point.
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This article was originally posted on FX Empire