We mentioned the other day how this time of the year often is much more "friendly" to natural gas bulls, and that has rang true and then some, with prompt month prices soaring higher again today, even testing the 2.50 level in today's trading session.
(Click on image to enlarge)
This an important zone from a technical standpoint, which we will get to in just a moment. First, a look at our seasonality chart shows that this rally has almost been enough to completely close the gap between 2019 and the pack of prior years.
(Click on image to enlarge)
In total, the front of the curve has gained nearly 35 cents over the last month, and about 45 cents from the early August lows.
(Click on image to enlarge)
But let's get back to that important technical zone, highlighted in yellow, up above. This is the zone which acted as very strong support for three years, since the Spring of 2016, that finally broke a few months ago. As all of you chart technicians are aware, this broken support now acts as what should be strong resistance, meaning that, if there is any bearish catalyst, you could get more of a reaction to the downside off this level.
Now, we are not about to imply that this means we will move lower next week. We still need that catalyst, which will likely have to come from the cash market. Our discussions all week have talked about the cash-led nature of this rally, as storage tries to refill as much as possible ahead of the cold season, with weather demand being strong enough to hinder those refill efforts thanks to intense heat in the South. After this weekend, southern demand finally will gradually tail off.
(Click on image to enlarge)
Comments
Log in or sign up to join the conversation.