Welcome to Extreme Investor Network, where we provide unique insights and analysis on the stock market, trading, and everything Wall Street related. Today, we dive into the recent movements in natural gas futures and what it means for traders and investors.
Short-Covering Potential: A Temporary Reprieve?
With natural gas futures settling at $2.329 last week, up $0.010 or +0.43%, there is potential for a short-covering rally in the near term. However, our analysts caution that sustainable price increases will require genuine buying interest rather than just short-term position adjustments. It’s important to note that the current move seems to be more technical in nature rather than a fundamental shift in market conditions.
Bears Still in Control: The “Sell the Rally” Mentality Persists
Despite the unexpected higher close, the prevailing sentiment among traders remains bearish, with many still following a “sell the rally” strategy. This cautious approach is driven by persistently high storage levels, which continue to put pressure on prices. While inventory levels typically decrease during summer, the focus is on supply levels as we approach the winter heating season.
New Lows and Historical Context: A Sobering Perspective
Friday saw the August futures contract hitting a new contract low of $2.249 before a late reversal. While this is a new low for the current contract, it’s important to consider historical context. Previous futures contracts have traded even lower, reaching levels of $2.128, $1.907, $1.482, and $1.481. These historical lows serve as a reminder of the market’s potential for further downside, despite the weekly reversal.
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