Natural gas prices fell again during the trading day on Wednesday, as we continue to witness a lot of bearish pressure in a market that was already falling apart. The fact that we are attempting to close towards the bottom of the range is also a very bad indication, and we believe it is just a matter of time until we see some form of continuation. I still believe that natural gas will rise to $3.50 per barrel in the long run, but it will take some time to get there.
Rallies at this time still have to worry about the gap above at the $4.50 level, so I believe we have somewhat limited upside, and short-term bounces will continue to be viewed as opportunities to short as temperatures rise in the United States. The contract we are now trading is the March contract, and we are attempting to price in what will happen in the spring.
I have no desire to invest in this market because, quite honestly, demand for natural gas will fall off a cliff once temperatures begin to rise again. The $3.50 level is one that I believe will be quite supportive, so keep in mind that the market may have to make several tries to break through there. If we do, it opens the door to a move down to the $3.00 level, which has been a price magnet in the long run and I believe will continue to attract a lot of traders.
Post Your Comments