Natural gas markets have plunged during the trading session on Wednesday as we continue to see the milder temperatures in the United States act like a wrecking ball for pricing. Unfortunately, most retail traders, and quite frankly quite a few professional ones, have no idea that this is a US contract. It does not matter what happens in Europe, and that is the most important thing that I can impart to you at the moment. The reason being is that the United States can only export about 12,000,000,000 ft.³ of natural gas, which is nowhere near to make a dent into what is going on in the European Union.
NATGAS Video 02.12.21
At the same time, temperatures in the United States falling of course would be bullish for this market but quite frankly this looks like another mild winter. In other words, demand is not going to be a strong as one would think. Furthermore, we are trading the January contract, so this is the absolute “peak season” for natural gas demand. If we continue to see temperatures look somewhat buoyant, that will mark the end of the trend.
Furthermore, I think that we have to worry about whether or not there is going to be enough industrial demand as there are a lot of concerns about the economy slowing down. Inflation seems to be peaking, and that has its say in this market as well. If that is going to be the case, then commodities in general could be in trouble. Natural gas was without a doubt overdone to begin with, and now that we have broken through the bottom of a massive descending triangle, it is possible that we continue to go much lower. I am now looking for signs of exhaustion to short.
For a look at all of today’s economic events, check out our economic calendar.
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2021-12-02 00:41:41Z
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