Natural gas futures gapped lower on the daily and weekly charts on Monday, but buyers quickly filled the gap. The move doesn't have much meaning at this time, but it does highlight some of the risk involved in selling this low on the charts, especially in front of the return of cold weather next week-end.
At 04:46 GMT, March natural gas futures are trading $2.727, down $0.007 or -0.26%.
We're not looking for a change in trend over the near-term, but we won't be surprised by a short-covering rally. This is because we believe that at current price levels, fund managers will be more inclined to short a rally rather than weakness.
Over the week-end, the record setting Arctic blast weakened across the Midwest, Ohio Valley, and Northeast. Highs quickly rebounded into the 40s and 50s by Sunday, with very comfortable 60s and 70s across the southern U.S. Temperatures even reached 80 degrees in Texas and Florida.
The easing of national demand for natural gas, which is expected to be much lighter than normal levels, is forecast to last through Thursday. After that, colder air is expected to return across much of the northern and eastern U.S., but there are few details about the extremes at this time.