The end of $1 natural gas?

Mike Zaccardi, CFA, CMT

The natural gas prompt-month is about to roll-out to the June contract. June is trading at $2.07 per MMBtu while the outgoing May contract is bucking up against resistance near $2. Calendar 2021 is at fresh 2-year highs at $2.75.

Technicals matter. The trickiness in futures markets comes when there is a steep contango or backwardation to the term structure. Natural gas is in rather sharp contango where near-term contracts trade well-below longer-dated delivery months.

So we could be in a new regime in a sense, back above the psychological $2 figure. 25-year lows were touched just a few weeks ago near $1.50.

Chart via