Natural Gas

hahah ! great point... sort of tru tho

 

Yea.... I've heard the volatility in commodities is great!

 

in what respect are you trading options in NG

 

Directional, instead of futures...... so if i get a futures signal to buy I will buy OTM call for example.. smaller delta's

 

MARKETS | 9/17/2012 @ 7:23PM |7.902 views
Natural Gas On The Verge Of A Breakout To $4 As Stars Line Up

http://www.forbes.com/sites/afontev...he-verge-of-a-breakout-to-4-as-stars-line-up/


Commodity markets are by nature violent, and natural gas futures are no exception. After bottoming out at $1.90 per million metric British thermal units (mmBtu) in mid-April, prices surged 72% to $3.29 toward the end of July, and then fell 13.9% to Monday’s $2.88; from the April bottom to Monday, prices are up 51.6%.


While there are many moving parts, natural gas prices are strongly tied to fundamentals. And these suggest prices will keep on climbing. The April bottom occurred as a storage surplus was growing large, which in turn sparked robust demand for gas-fired power as utilities moved away from expensive coal. The “correction mechanism,” as Canaccord’s John Gerdes put it, went into overdrive as prices surged on the back of buoyant demand; demand is now waning, though, as prices rise.

As cheap natural gas and intense demand from utilities drew down inventories, gas producers were cutting their production in response to ultra-low prices. “Gas directed drilling has overcorrected to the downside against the backdrop of extraordinarily weak gas prices,” explained Gerdes, noting the E&P industry “has cut gas-directed activity to [about] 450 rigs, which is markedly below the 650-675 gas rigs necessary to maintain long-term market balance.” The market, the analyst explains, is undersupplied by 1.5 to 2 billion cubic feet per day in a weather-normalized basis.

According to their estimates gas storage will hit year-ago levels toward the end of this year, with inventories peaking around 4,000 billion cubic feet and then falling dramatically. “If the storage dynamics materialize as [forecasted], our $4 gas price forecast next year has upside basis,” wrote the analyst.

Inventories could fall to about 1,750 billion cubic feet by April 2013, then bounce back up to 3,500 Bcf by November 2013, “a level comparable to November ’08. Notably, in the fall of ’08, natural gas prices were above $7.”

At the same time, supply is expected to remain stable through mid-2013, with modest gains in early 2013 given the completion of wells deferred earlier this year. An overly optimistic estimate of about 600 gas rigs by November 2013 would result in a gas storage level of 3,500 billion cubic feet. “Without at least a $4 gas price signal and corresponding increase in gas-directed drilling activity, our November ’13 storage projection will likely also prove to be overly optimistic,” Gerdes added.

These factors suggest natural gas prices are ready to move up once again, despite a recent correction. Ben Bernanke’s QE3 announcement could add fuel to the fire. Gerdes suggest the top pick in the sector is Cabot Oil & Gas, which has 10% potential upside in a $4 gas environment and 60% upside assuming his long-term $4 gas expectation. Other companies that could benefit include Chesapeake Energy, Apache Corp, ConocoPhillips, and Exxon Mobil.

Supply and demand dynamics suggest the stage is set for rising natural gas prices. With storage levels falling and robust demand (which is weakening) putting a floor under prices, natural gas could rally to $4 by the end of the year, if not higher, Canaccord’s Gerdes believes. Loose monetary policy and the coming winter could provide further price catalysts to bet on the rise of natural gas.

 

http://forecast-chart.com/forecast-natural-gas.html

Forecast for Natural Gas Price Index: Henry
Hub, LA for the target month indicated.
Measurement is in Dollars Per Million BTU.

August 2013 -forecast 2.3 $



The forecast for Natural Gas Prices is in the table at the top of this page.
Forecast-Chart.com is forecasting that Natural Gas Prices will be roughly $2.3
next August. The table shows a HDTFA of $1.0 which suggests that Natural Gas
Prices in August, 2013 could easily fall between $3.3 and $1.3. Links to
Forecasts for many other economic indicators may be found on the left side of
this page.

Average Natural Gas Prices
Last Month 3.0
Last Year . . . . . . . . . . . . . . . . . . . . 2.9
Last 5 Years 5.1
Last 10 Years . . . . . . . . . . . . . . . . . 5.8
Last 20 Years 4.4

Natural Gas Prices: Highs & Lows
High (Last 12 Months) 4.1 (August, 2011)
Low (Last 12 Months) 2.0 (April, 2012)
High (Since November, 1993) 13.4 (October, 2005)
Low (Since November, 1993) 1.4 (July, 1995)

The Natural Gas Price for July, 2012 was $2.96. That's $0.50 higher than the
June, 2012 average price which was $2.46. It is $1.46 lower than the July, 2011
price of $4.42. The rise in Natural Gas Prices from June to July indicates that
the short term Natural Gas Price trend has been up. If that trend continues, we
should see a Gas price in August, 2012 that is close to $3.5.

Over the last year Gas prices have averaged $2.92. The average price over
the last 10 years was $5.82. Lower Natural Gas Prices over the last 12 months
compared to the average prices over the last 10 years serve as an indicator
that the long term rate trend in the Natural Gas Price is down. Gas price
expectations should be adjusted accordingly.

Our historical research covers Natural Gas Price data back to November, 1993.
The average price of Gas during that period of history was $4.36. The highest
price was $13.42. The lowest Gas price was $1.44. The high was attained in
October, of 2005. The low was achieved in July of 1995.

All Gas price figures are based on the average daily price per month.

This page provides a five year chart and a forecast for Natural Gas Prices. For
links to longer term charts, look at the links under the five year chart (above).
One link opens a ten year chart. Another opens our longest term graph on
Natural Gas Prices. Just one glance at our long term charts can provide
tremendous insight into the historical trends of the financial markets. The data
table above presents the history of Natural Gas Prices in numerical format.

 

what is your timeframe? At what what point if you are buying calls do you roll out of the front month?

 

Depends ... sometimes days, maybe week or so. Dont hold to expiry if that is what you mean ?

usually 15 days out is close to expiry i get..

 

In interested in this... bull call spread or just long calls? Itm otm?

 

OTM long calls/puts