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Natural Gas Markets Facing Challenges

I have no interest in buying natural gas anytime soon, but if you wanted to do for a longer-term trade, as long as you can ride the volatility in an ETF, it’s a possibility.



Natural gas markets have been drifting lower during trading on Tuesday, and it looks like we’re sticking to the downtrend for now. The latest buzz is about the abundant supply coming from the Freeport terminal in Texas, which is more than making up for losses elsewhere. This situation means that the market’s going to have a hard time taking off anytime soon. Honestly, I think people are going to keep seeing this through the lens of low demand.

One of the main reasons for low demand is that we’re heading into a warmer time of year. Sure, temperatures are a bit cooler than usual right now in the northern hemisphere, but that won’t last forever. As we all know, natural gas demand tends to drop when things heat up. Plus, there are worries that the global economy might slow down, which would seriously cut down on industrial demand for natural gas. So, if you’re keeping an eye on this market, be cautious and remember that any rally might just be a chance to short.

In terms of resistance, the 50-Day EMA is sitting at the $3.10 level and will probably keep playing hard to get. If we do manage to bust through that, I’d be pretty surprised, but then we’d have the $4.00 level to contend with.

  • On the flip side, the $2.00 level is likely to be a solid support for any move lower, but that doesn’t mean it’s a sure thing.
  • There’s a whole lot of fear floating around, and it could spell trouble for all sorts of assets, not just natural gas.
  • That said, if you can get your hands on some natural gas through an ETF or some other non-leveraged option, this might turn into a sweet bottoming pattern for a swing trade down the line.

Natural gas markets are in a bit of a pickle right now with excess supply and dropping demand. As we move into warmer months and face potential economic slowdowns, it’s important to trade carefully and look for opportunities to short during rallies. Keep an eye on those resistance levels so that you can get an opportunity to make profits based upon what the market is clearly screaming at this point in time. I have no interest in buying natural gas anytime soon, but if you wanted to do for a longer-term trade, as long as you can ride the volatility in an ETF, it’s a possibility.

Natural gas chart

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