Can someone explain how a drop in crude would cause a short squeeze in NG? I just read this story in http://www.automatedtrader.net/real...al-gas-nymex-april-natural-gas-prices-rose-on and am trying to understand the mechanics of that trade. Here is the actual text of the article. I have bolded the sentence I'm trying to understand. NATURAL GAS: Nymex April Natural Gas prices rose yesterday on cooler temperature forecasts for April and as traders booked some profits after the sharp falls last week. The Henry Hub contract opened at $3.792 and dipped to $3.731 before rallying strongly to a high of $3.936 ahead of the close at $3.927. Early analyst suggestions for this week's US Dept of Energy report are looking at a withdrawal of 84 billion cubic feet of natural gas storage for the week ending March 4. Positioning in the Nat Gas futures is now at near record short levels and the price has held up noticeably well just below the $4.000 level. Some analysts are now looking for a short squeeze in coming sessions, particularly if Crude prices start to fall rapidly. Support today is seen at $3.880 and $3.853 with resistance at $4.001 and $4.076
Possibly that NG shorts against long Oil or derivatives of Oil will buy back or flatten position.... I.E. buy gas, not because htey think its going up 1.00 but to close position, just a thought. But I am sure the experts here on ET will twine together a nice story about this or that....... keep it simple I say..