Natural gas markets have rallied again during the course of the trading session on Monday, as we have broken above the $3.60 level in the parabolic move. The market looks likely to continue going higher and based upon the “measured move” of the previous consolidation, we could go as high as $4.40. That being said, the market is likely to continue to see plenty of buyers on dips, and now that the $3.40 level is in the background, it is very likely that we would see that level act as a bit of a “floor the market”, and therefore I think there will be plenty of support in that general vicinity.
NATGAS Video 29.06.21
However, the biggest problem that you may have here is that if there is a sudden correction, it could be brutal. We are currently seeing a major heatwave in the western United States, which is driving up demand, but one would have to think that this is somewhat limited in its duration. Yes, there is the commodity boom going on at the same time, but natural gas is by far the most oversupplied market from a structural standpoint how of the major commodities. In other words, this could be the first place that we see a break down in the commodity markets.
This is a nice short-term set up, but eventually once temperatures get back to normal, the demand for natural gas will fall off of a cliff, so later this summer we will probably see a massive plunge in the market. However, in the short term it is obvious that we are ready to go higher.
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This article was originally posted on FX Empire
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