Natural gas markets have fallen a bit during the trading session again on Monday, as we continue to see natural gas get absolutely hammered. Even though temperatures in the United States are getting colder, quite frankly we have so much in the way of oversupply it’s almost impossible to imagine that this market will break out to the upside. Quite frankly, rallies at this point are to be looked at with suspicion, as there is obviously not enough winter left to go through to wipe out the massive amount of natural gas that is sitting in storage.
NATGAS Video 21.01.20
Fairly soon, we will be trading the springtime contracts, and that of course is going to continue to drive valued lower. Ultimately, this is a market that is completely broken and at this point we are looking at a handful of bankruptcies this year with major producers. In the end though, that will probably be a good thing for the industry because the oversupply has gotten out of hand. Keep in mind that the Americans had drilled 17% more this past year than they did the year before, which was already oversupplied.
If and when we break down below the candlestick for the trading session on Monday, the market probably will go looking towards the $1.75 level next as it is a large, round, psychologically significant figure. However, I believe that we are more likely to see a little bit of a bounce, but I would be more than willing to sell this market closer to the $2.20 level if we can get that bounce.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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