I am betting that nat gas inventories have peaked. The sesonal peak in inventories is usualy in October. Spot prices in nat gas do not correlate all that well to furures prices. .. and even if they did, spot prices could jump up to near futures prices. Though oil & nat gas are not closely correlated, there is some correlation. Cold weather is still a relatively significant factor in nat gas prices. Concerning this point, it is my oppinion that the market was very complacent lately in regards to weather. Alot of sources were expecting warm weather and that was certainly priced in. Therefore, I thought it would be probable to see a decent jump in nat gas on any word of cold weather. ... I got lucky there. I've only been long on this nat gas position since last Friday so I am going to hold it for a while. I do think that Dec nat gas can climb to near 10.00 over the next couple weeks. In the mean time, I'll just sit tight with this long position. A pop above the previous top on the daily charts would be a promissing sign for the nat gas bulls ... hope we see that this week
just a bit higher to break the recvent top on nat gas (daily charts) and it should look good for about 10.00 or so for Dec.
Hadn't all the Aramanth leftovers been dished out for a few weeks? It doesn't seem like anything new has happened. My guess is that it's either a chain reaction of shorts covering or a realization of how the nat gas futures have been oversold. I'd expect a correction up another dollar to reach the linear decline that the natural gas futures had been following before the sudden downturn.
I agree here, and I've traded physical and financial gas. The only real assurance you have about this relationship is that futures prices and Henry Hub spot prices will converge. You have no idea what path each of the prices will take to do that . Further, spot prices across the country aren't really relevant, as they depend on very local factors.
i'm sorry, but fundamentals DO matter in the market. the weather story is practically no different than last friday. I think this is amaranth short covering. notice every dip is getting bought... but there doesn't seem like momentum. you haven't seen one spike up in ANY of this buying. That means its very deliberate, and likely not too many stops are positioned to buy right now. The spikes down say everyone is positioned to sell this market. it makes sense to attempt a short cover 10 days before expiration ... Gives them a little more time to unwind just in case the winter forecast actually changes. And furthermore, looking at all of those market inversions the last week -- huge selloffs, then instant buybacks -- makes sense...
I am only comparing spot henry to futures henry. I agree comparing spot at other hubs to futures henry is pointless.
Okay, but you still don't know how convergence will take place. The futures could move up and HH gas could move up even more to catch up with it. I mean, if you have some kind of study you've done showing a reliable statistical tendency in this relationship, I'm all ears, but if you're simply expecting futures to move down because HH spot is down right now, it's not a good bet.