Oil & Gas - Energy - Commodities - Resources (OILBRENT)

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Natural Gas Markets Show Signs of Hesitation
By: Christopher Lewis | August 3, 2022

• Natural gas markets have rallied ever so slightly early on Wednesday, but at this point still look very likely to continue seeing issues.

Natural Gas Technical Analysis

Natural gas markets have gone back and forth during the course of the trading session on Wednesday as we continue to see a bit of gravity coming into the picture. That being said, the market continues to weigh in a massive amount of factors, not the least of which will be the fact that we may be heading into a massive recession. If that’s going to be the case, demand for natural gas will probably drop from an industrial standpoint.

We also have seen the heat wave in the United States stop, so that of course has a certain amount of influence on this market as well. Remember that the Henry Hub contract is essentially the United States, so whatever is going on in Germany only has a limited effect. With that being the case, I think we have a situation where the market will probably continue to see a lot of volatility, but it should also be noted that the natural gas markets are extraordinarily high at the moment, and therefore if we return to any type of normalcy, that means lower prices.

The 50 Day EMA sits at the $7.39 level, and therefore we need to be cognizant of that region. If we reach the 50 Day EMA, it’s likely that the market will probably see a little bit of market memory come into the picture. In this environment, I like the idea of fading short-term rallies, because I do think that it’s possible that we get down to the bottom of the overall consolidation range, which is all the way down to the $5.50 level.

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