The natural gas markets have drifted a bit lower again during the early hours on Thursday as we continue to see downward pressure overall. That being said, we have bounced a little bit from the lows, but I think really at this point in time, what you’re starting to see is the cyclical trade really flex its muscles. This, of course, makes a certain amount of sense because one of the most important regions for natural gas is experiencing warmer temperatures. As springtime starts to hit places like Boston, New York, Philadelphia, and Washington DC, you see a lot less demand for natural gas as far as heating is concerned.
Now, this isn’t to say that there won’t be other reasons for demand, but there is a massive amount of pull on the storage capacity of natural gas in the United States during the cold months. And therefore, this time of year, typically you see a bit of softness. We have broken below the 50 day EMA, which is also something worth noting. And now I think we may go looking to the $3.50 level. That doesn’t mean we get there overnight, it doesn’t mean that it’s going to be an easy trade to hang on to, nor does it mean that we won’t get the occasional bounce, but I do think that’s the way things look now.