The natural gas market has fallen a bit in the past week, as we continue to see the market simply look a bit hesitant to strengthen. This is a market that is highly cyclical, and this is typically the worst part of the year.
The natural gas markets have fallen pretty significantly during the course of the trading week to go looking to the $2 level underneath. The $2 level, of course, is a large round, psychologically significant figure. And it’s an area that we’ve seen a little bit of a pushback. Keep in mind that this time of year is typically very negative for natural gas. So, I think you’ve got a situation where traders will continue to assume that we drift back and forth in a relatively tight range.
However, if you’re a longer term investor, this is an area where you can start to dip your toe in the water. After all, the market is likely to price in the heating costs later this year, like in fall or so. So if you’re not overly levered, it becomes a nice investment. It’s a cyclical investment. I do every year.
We had the nice shot higher due to the heat wave, but that heat wave has come and gone in the US. And I do think that it is probably only a matter of time before we start thinking about temperatures in November. We’ve got a couple months before that really takes off, but I like to have at least a built up position heading into it. And then as we shoot straight up in the air, eventually we almost always do late in the year, I’m going to collect my profit and move on from this market again.
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Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.