• Front month is now June 2025 futures.

• Models continue to see further downside in the June 2025 futures for the next several days.

• Immediate price levels to watch are the 3.0 and 2.9 levels in the June 2025 futures.

• Market went through stops at 3.2 level in June futures on Monday 4/21 - statistically, rallies were limited following this break. Selling power still outweighs buying power in this market.

• Market could not sustain any price increases following bullish EIA storage number on Thursday 4/17, yet another bearish signal.

• We do not recommend initiating any long positions in this market until long liquidation has been exhausted amongst systematic traders.

Our models continue to see further downside in June 25 Natural Gas futures for the next several days. We mentioned in our last post that systematic traders have been exiting their long positions for the past several weeks, a trend which must be fully exhausted before we can recommend initiating a long position.

We also mentioned in our last post that rallies have been sold aggressively over the past several weeks - and the past few days have been no exception. The market broke through the 3.2 support level on Monday 4/21, and every minor rally since then has been sold.

We see a lot of stops concentrated between 2.9 and 3.0 in the June 25 futures - should the market break this level, the probability of an accelerated move to the downside increases significantly. If the market has truly reached a short-term bottom and long liquidation has been exhausted, we expect a strong bullish reaction immediately after this level has been tested.

On the upside, we see stops at the 3.75 level, and 4.0 level.

As stated in previous posts, our models alert us that: (a) short-term rallies have had a higher-than-normal probability of being sold aggressively since the March 9th high; (b) long positioning amongst speculators continues to decline; (c) offer sizes have been unusually large.

All factors above lead us to the conclusion that systematic traders are still getting out of their long positions - without any clear end in sight as to when this long liquidation may end, we do not recommend initiating any long positions.

The rally-selling has continued over the past several days; as an example, the upward spike on 4/17 immediately following the release of the EIA storage report was fiercely sold. This number was over 1 standard deviation below expectations, creating an initial upward price increase, as expected. However, this rally was also aggressively sold - two hours after the release, the market was trading below the level it was initially trading at, yet another sign that the market has further downside ahead. Statistically, rallies have been continuously sold over the past few days.

Near-term put options remain more well-bid than call options, which is an unusual phenomenon, as discussed in our previous post. Put open interest remains above call open interest, which suggests that systematic traders have started to hedge their money-losing long positions with out-of-the money puts.

For those of you who want to get short (you’re in the minority!) - now is a great time to initiate a short position. Keep in mind that we do not see significant downside in the medium/long-term (3-6 months out) , only in the short-term.