Natural gas markets found a little bit of support at the $2.30 level for the second day in a row, as the Thursday session was slightly positive. However, it looks as if the $2.30 level will eventually be broken, and as the natural gas markets have survived a scare when it comes to supply. The tropical storm that hit the Gulf of Mexico ended up being a dud, causing a bit of flooding but nothing major. With that in mind we are also looking at hotter temperatures in the month of August coming for the United States and that could drive up demand but ultimately these are short-term factors.
NATGAS Video 19.07.19
The longer-term factor in the market is that we are oversupplied and of course been in a bearish market for ages now. I think at this point any rally is to be faded, especially near the $0.10 level such as the $2.40 level, the $2.50 level and so on. That being said, if we can break down below the $2.30 level, then it’s likely that we will go down to the $2.25 level followed by the $2.20 level. Ultimately, I do believe that this market will go looking towards the $2.00 level given enough time. This is a market that simply is oversupplied from a structural and long-term standpoint as the Americans have more natural gas in the ground than they know what to do with. Even worse, Canada has even more. With that being the case, natural gas is something that you buy ahead of the cold months, and the rest of the year look for selling opportunities.
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This article was originally posted on FX Empire