"There is a great deal of bearish sentiment on natural gas heading into summer. I wrestle with the known knowns as you and David often refer to. Do you think we are in for further and longer pain?"

Eoin Treacy's view Thank you for this insightful email. Shale gas has increased domestic US supply considerably and the industry is still responding to this relatively new development. As we move into summer's peak cooling season, supplies are ample. Increased onshore supply and the strengthening of offshore facilities have reduced the threat from hurricanes.

If the environmental concerns surrounding hydraulic fracturing can be resolved and this much touted supply continues to be brought online in the quantities promised, the economics of a more natural gas-centric economy are compelling. However, this is a relatively long-term potential development and in the medium-term prices are likely to remain under pressure.

Natural gas fell for 8 consecutive weeks, but found support this week below $4 and rallied today to form an upside key day reversal. In conjunction with the oversold condition and bearish sentiment there is potential for a further relief rally as some of the shorts are pressured.

The $4 area marked the upper side of natural gas' long base, so it will be interesting to see to what extent it finds support in this region. If natural gas performs similarly to other commodities it will build support in a ranging consolidation, mostly above the long-term base.