Hedge funds turned bearish on U.S. natural gas for the first time in eight weeks as a surplus and warmer-than-normal weather pushed the price of the heating fuel to the lowest level in more than two years.*As I mentioned last month:
The funds and other large speculators switched from bets that futures will rise to a bearish, or “short,” position of a net 10,344 futures equivalents in the week ended Jan. 10, according to the Commodity Futures Trading Commission’s Commitments of Traders report on Jan. 13.
Natural gas plunged 13 percent last week on the New York Mercantile Exchange, the biggest decline since August 2009, after forecasts showed above-average temperatures through January. Stockpiles in the week ended Jan. 6 stood at 3.377 trillion cubic feet, 17 percent above the five-year average, the U.S. Energy Department reported on Jan. 12.
“The funds that got short are feeling good right now,” Kyle Cooper, director of research for IAF Advisors in Houston, said in a telephone interview on Jan. 13. “As long as it stays this warm, prices have to go lower. With this type of weather, the storage surplus becomes catastrophic."...MORE
When options on the futures were introduced in 1992 a buddy of mine eschewed all weather reports from the Midwest and Great Lakes figuring that the only temp that mattered was whether or not the traders felt cold at the exchange.
He retired rich, I don't know if there's a correlation.
Here's this morning's WSJ headline: