(MENAFN- Daily Forex)

• Natural gas shows choppy early-Thursday trade after an overheated surge on the December contract.
• Seasonal cold supports prices but shifting forecasts raise pullback risks.
• A sharp correction could invite buyers, keeping the market a long-only setup.

The natural gas market has gone back and forth in early on Thursday as we continue to see a lot of noisy action overall. Ultimately, this is a market that is simply difficult to trade at the moment due to the fact that we shot straight up in the air once we switched over to the December contract. This, of course, is one of the most bullish times of year as temperatures start to drop in places like New York, Boston, and Philadelphia.

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Ultimately, you also have to keep in mind that a lot of natural gas trading is based on the latest weather forecast. And while temperatures are fairly cold in the Northeastern part of the United States, it does drive price up. But some of the forecasts coming out suggest that perhaps we may get a little bit milder temperatures.

In that same area, and if that's the case, we could get a pullback. Quite frankly, a pullback is exactly what is needed in this market as it has gotten too far ahead of itself. Pulling back to the $4 level could open up the possibility of value hunters coming back into the market. While that would be a pretty steep drop, natural gas is one of those markets that can do remarkable things in a very short amount of time.

I do not like the idea of chasing the market all the way up here. You are just simply chasing for the point of chasing a market. The market has gapped higher at the open and gone straight up into the stratosphere. Moves like this normally have pretty volatile and violent corrections. That is likely to be the case here. Once that violent correction occurs, then you have to start looking for the possibility of buying some type of bounce. I have no interest in shorting natural gas at this point.

This time of year, it is simply a long-only type of asset.

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