- In my daily natural gas analysis, I can see that we are attempting a bit of a recovery.
- At this point, it would make a certain amount of sense that the market will be very noisy and perhaps a bit of a stretch to the downside.
- The market is likely to continue to see a lot of value hunters coming into pickup contract, which makes sense considering that the season is typically very quiet, but at this point in time, we have collapsed in value so quickly that if the market even starts to show any signs of short covering, this is a market that could bounced quite violently.
Seasonality
Keep in mind that summer is typically a very quiet time for natural gas, and therefore I think a lot of longer-term investors are likely to get involved at this point in time, and to try to take advantage of a move to the upside. All things being equal, there are a few areas above that I think are thought of as major milestones along the way. For example, the $2.25 level is an area that I think that if we can get above it, it could bring in even more buying pressure.
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Typically, we will see that toward the end of summer traders will come in and start buying natural gas due to the fact that there will be more demand for heating in the fall season, and I think that is a major reason that we could see this as a potential investment set up. Don’t get me wrong, I don’t think this is a market that will put a lot of money into, but I think it is probably only a matter of time before value becomes far too much to overlook. If you have little or no leverage, this is an excellent opportunity over the next several months, but you have to be able to deal with the volatility that will almost certainly occur between now and then.
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