Monday, July 29, 2013

Natural Gas: Futures Getting Crushed, Likely that Peak Demand Has Passed

This stuff can be nerve-wracking. For relaxation I'm thinking of doing handstands on the edge of a volcano,
much less stressful than natural gas.

The $3.24 target we've been babbling about is looking more and more realistic. After getting hammered last week the futures are down another 8 cents (2.14%) at $3.48.

From RBN Energy:
Highlights of the Natural Gas Summary and Outlook for July 26, 2013 follow. The full report is available at the link below.
Natural Gas Summary and Outlook
  • Price Action: Prices plummeted 23.2 cents (6.2%) to $3.555 on a still below average 23.2 cent range.
  • Price Outlook: The market tried vainly to establish a new low and avoid a rare inside week. However, prices remained 2 ticks above last week and indeed a rare inside week occurred. Since 2000, only 63 inside weeks have been recorded. With prices ending near the weekly low and temperatures moderating, a new low next week is expected. Temperature forecasts are now stretching into the middle of August and currently those outlooks do not indicate a return to the recent peaks. Thus, it seems increasing likely that the weekly summer demand peak has occurred and that demand will be falling in coming weeks. The CFTC data indicated a rise in the net long speculative position. Considering price action, this is somewhat surprising. However, futures open interest continues to fall while total open interest, on a delta adjusted basis, rose. Across the complex total open interest stood at 5.22 million as of July 23. CME open interest was 1.37 million contracts as of July 25. This is the lowest futures open interest since March 21, 2013....MORE
From FinViz, the last three weeks:

Natural Gas Futures on the Defensive
Not a lot of catalysts for higher prices which makes calling for a decline to the top of last September's gap at $3.24 less risky than it might appear at first blush. $3.6170 last, down 2.7 cents.
 - NatGas Aug Options Expiry (1930BST/1330CDT)...
EIA Natural Gas Weekly Supply/Demand Update (July 25, 2013)

EIA Weekly Natural Gas Storage Report: Low but Not Low Enough For Bulls
$3.674 down 2.4 cents with the low for the day at $3.6410.
More to come this afternoon, we are still looking for a trade to the top of last September's gap at $3.24.... 
 After This Week's Heatwave Look for $3.10 Natural gas

EIA Natural Gas Storage Report: Injections Way Low, Futures Go Way High
 This was not in the master plan for world domination, front futures up 18 cents (4.95%) at $3.8140.
The countertrend moves, if and when they happen are amazing....
And many more. We were able to trade the heatwave to the upside and reverse.
Sometimes you get lucky.