- The natural gas markets were somewhat noisy during the early hours on Thursday, which is not surprising considering the massive move higher that we've seen over the last couple of weeks, and the lack of liquidity.
- With all that being said, I think you've got a situation where traders will have to look at this through the prism of whether or not they can find value.
I suspect at this point we are trying to price in those colder than anticipated temperatures in the United States coming with that Arctic blast. But I think you also have to keep in mind that the futures traders out there will be looking towards spring before you know it. So, I think we only have maybe one or two more pullbacks and bounces for the rest of the season.
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Pullbacks? Please.
I do like the idea of buying a pullback if we get it. We did not quite fill the gap from earlier this week, but we've gotten pretty close. So, I think that's probably close enough for government work as it were. I do think that if we can overtake the $4 level in the spot market, that opens up a potential move all the way to the $4.50 level followed by $5. I don't like the idea of chasing the market with a huge position though. I'd be much more comfortable buying a dip closer to $3.50 with a bigger position. But I recognize that at this time, it's obvious natural gas is breaking out.
The question is, will it have any follow through? I suspect the answer is probably yes before it's all said and done, but the next week is going to be very erratic as we try to price in more liquidity, and of course, the idea of temperatures plummeting in the United States because they can turn around just as quickly. And if that happens, natural gas falls. There is the outlier of Europe though, and Russian gas not flowing through Ukraine, of course has somewhat of an influence as Europeans will be buying LNG from the United States, but really at this point in time, I don't know if that is as much of a factor as the weather in New England, for example.
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