Natural gas tested $3.50 on a U.S. heat wave and reversed. Storage surpluses held. The range favors shorting overextended rallies, Chris said.
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Natural gas futures bumped higher last week. A heat wave moved across parts of the United States, lifting prices. The move stalled at $3.50 resistance. Prices have since drifted back toward the 200-day moving average.
The four-day event was not long enough to draw down storage. Inventories sit well above the five-year average. The supply-demand equation did not shift.
The range is $3.00 to $3.50. A break below $3.00 opens a path to $2.75. Rallies above $3.50 are sellable. The market has not offered an overextended move yet. "You have to be able to sit and watch the charts," Chris said.
For short-term traders, the range offers scalping opportunities. The higher-probability trade, Chris noted, is to wait for a failed rally at resistance and then sell into the weakness. For utilities like Emera (EMA), a sustained drop in gas costs would ease input pressures later this year.
The next EIA storage report will test the thesis. If the heat wave failed to materially slow injections, the bearish floor below $3.00 becomes the active zone. Until that print, the 200-day EMA range holds.
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