From the Wall Street Journal:
It has been a cruel summer for natural-gas investors.
Gas prices were buoyed in early June by low supplies and the prospect for a hot summer, which would boost demand for the fuel. But temperatures have been tepid, with weather forecasts through the end of August turning cool.Prices have lost 20% since mid-June, ending Friday at $3.776 a million British thermal units on the New York Mercantile Exchange, a nearly three-week low.If the end-of-summer outlook holds true, it will serve as a fitting coda to a mild season that has kept demand in check and allowed producers and utilities to rebuild inventories badly depleted last winter. Utilities burn natural gas to generate electricity, and a hot summer can boost demand for gas to run air conditioning in homes and businesses. In the winter, natural gas is used to warm more than half of the homes in the U.S.Traders in the market have been focused on whether the weather would allow the U.S. to reach adequate supply levels by early November, but fears of a shortage have dissipated amid low demand and robust production. Indeed, hedge funds and other financial investors have cut bullish bets on natural-gas prices to a nearly nine-month low, after those bets hit a record high in February, regulatory data show."We think you're going to have plenty of gas for the winter unless you've got some kind of extreme weather event, which, how likely is that?" said Brian Bradshaw, a portfolio manager who oversees energy-derivatives trading at $1 billion fund firm BP Capital in Dallas. "You have to say it's a low probability." The firm doesn't have positions in near-dated futures, but put on a bullish position in the January contract when it dropped to $4....MORE
September futures $3.764 down 0.012. Here's the action over the last year from FinViz:
We continue to prefer the equities to the futures but that could change any day.
