Natural gas markets broke down significantly during the week, as we continue to see a lot of bearish pressure in this commodity. It is oversupplied, so that makes quite a bit of sense, especially considering that the temperatures this winter have been warmer than anticipated. Ultimately, this is a market that is likely to reach towards the $1.80 level and perhaps even break down below it. If we do break down below there, it’s likely that the market could go towards the $1.75 level. Clearly, we are a bit overextended to the downside, but I prefer to fade rallies going forward more than anything else. The longer-term trader probably doesn’t have enough room to move though.
NATGAS Video 27.01.20
Going into this year, it’s very likely that we are going to see bankruptcies in the natural gas industry, and quite frankly that’s exactly what’s needed. I believe that if the market reaches towards the $2.00 level, sellers will more than likely get involved. Beyond that, the $2.20 level is also a selling opportunity. I have no interest in buying natural gas, because quite frankly it’s very difficult to imagine a scenario where natural gas should be bought, because the Americans drilled 17% more over the course of 2019 than they did in 2018, which was also oversupplied. We are starting to trade the March contract, which means we are going to be trading warmer temperatures. Quite frankly, natural gas is an absolute miserable mess, and it’s going to be difficult to think about going long of this market anytime soon. In the future, we will eventually see enough distraction of suppliers to bounce back but it isn’t going to be anytime soon.
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This article was originally posted on FX Empire
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