The natural gas markets have drifted a little bit lower during the trading session here on Friday in the early hours as we continue to see a longer term downtrend play out. After all, that makes a lot of sense considering that demand for natural gas will be almost unknown. All things being equal, unless we get some type of heat wave in the United States, natural gas demand will continue to be low. After all, the natural gas supply is abundant, and on top of that, there’s just no shortage whatsoever. In fact, we may have issues with storage down the road until we get cold month, and that’s what will save this market.
Once we start focusing on the colder months in the futures market, then natural gas will inevitably bounce. It does every year, which makes sense as places like Boston or New York need more heating. A bounce from here does make a certain amount of sense. But that bounce is something that I’ll be looking to short this market, especially near the $3 level, if we can find some type of exhaustion candle. After that, if we were to break to the $3.20 level, or basically the 50-day EMA, I am more than willing to start shorting there as well. If we break down below the $2.50 level, then I think the bottom falls out completely. But I do think at this rate, we are at least going to try to get to the $2.50 level.