Natural gas markets rallied significantly during the trading session on Thursday, reaching towards the highs again as the inventory numbers came out very supportive. Ultimately, the market looks as if it is trying to make its move to the upside, but there is a significant amount of resistance just above to worry about as well.
Natural gas markets rallied significantly during the trading session on Thursday as the inventory number came out at 46 billion, which was expected to be 65 billion. Ultimately, this is a market should offer buying opportunities, and therefore I think you should wait for pullbacks to do so. It looks as if we will try to go to the $3.10 level and possibly even higher than that. Ultimately, this is a natural gas market that is heading towards the colder months of the year in the United States, so it makes sense that we would continue to see bullish pressure. However, there is so much in the way of resistance above that it’s going to be very difficult. I think we will see a lot of choppiness and confusion, and there is the ever present possibility of the market rolling over.
If the market does rollover and break down below the $2.95 level, then I think we could drift a bit lower, perhaps even as low as the $2.75 level. This is a market that has been consolidating for quite some time, and we are at the top of the range. However, it makes sense to be appear at this time of year. If we do get the break out, I think we will eventually go to the $3.15 level. I think in the meantime you should probably count on a pull back, as it is being shown on the hourly chart.