Currently, the prompt month natural gas contract is trading at $2.71, up 5 cents.
Yesterday, the Natural gas market initially tried to rally towards the $2.78 level but found enough resistance in that general vicinity to turn around.
The $2.80 level is the major level that people are paying attention to, as it has been resistive in the past. It then cratered during the trading session,
breaking down to the $2.68 level. The EIA released a bullish inventory number though, so it did cause a significant bounce.
However, we are starting to roll over again, and it is only a matter of time before we reach a lower level. The $2.60 level has massive support underneath that should be a target.
The fact that we had such a bullish candle and then started to roll over again after the inventory number tells the market that there is still plenty of selling pressure.
This market will continue to be a “sell the rallies” situation, as the oversupply of natural gas continues to be an issue. Granted, the draw from inventory was higher than anticipated,
but we are getting towards the warmer for the year in North America, and that will put a massive amount of demand destruction for the market to think about into play.
A breakdown below the $2.60 level opens the door to the $2.50 level.