What's your view on natural gas long term?

Discussion in 'Commodity Futures' started by Sequoia1321, Jun 27, 2020.

  1. Sig

    Sig

    Electric utilities all set their avoided coat rates on long term forecasts of natural gas costs. In practice they are almost always wrong, often wildly so when it gets past a year or so. That's especially the case now with fracking where high gas prices have an almost immediate impact on supply since its so easy for any Chuck with a truck to set it up or restart a fracking operation.
    While I wouldn't consider the utilities the smartest people in the room, there are several hundred of them that collectively apply an awful lot of brain power and research dollars into cracking that nut and consistently fail pretty miserably. So based on that I think it's just a really hard thing to predict. Maybe look at a strategy of doing the opposite of what they do? Their record is so bad maybe it's predictive?
     
    #11     Jul 1, 2020
    murray t turtle likes this.
  2. I'm sorry, I don't understand. Are the utilities long or short on natural gas?
     
    #12     Jul 1, 2020
  3. I'm thinking of maybe getting into it one contract around $1.62 if it goes back down, and just leave it be as an investment, no stop loss, and maybe add to it if it gets closer to 1.00. I guess then just roll it over until it makes a big move up.
     
    #13     Jul 1, 2020
  4. Sig

    Sig

    They're trying to predict the price and failing. They're natural users of the gas, but they need to predict prices for what they call an avoided coat calculation needed under PURPA. All very inside baseball, but bottom line is that efforts to predict natural gas prices out more than a year have been dismal failures for years because it's really damn hard to do.
     
    #14     Jul 1, 2020
    TraDaToR and Sequoia1321 like this.
  5. Oh, I get it now. So it's not an easy thing to predict. But looking at the monthly chart it's near historic levels. Seems to me not a bad trade for an investment, if nothing else goes wrong, like negative price, high roll over cost, etc.
     
    #15     Jul 1, 2020
  6. Bill R

    Bill R

    I have been buying call spreads and selling further otm calls against it. Also have a few bullishly skewed short strangles sucking up some of that sweet premium. I don't think you are going to have to wait a year, by the end of July we will be at 3. There will be no repeat of the oil debacle the brokers have learned their lesson at least in mean time.

    We are in a cycle where fundamentals don't mean anything. Its just about money flows. Risk / Growth/Defensive - inflation - rates. Paint with broad strokes with all the shit that is going on!
     
    #16     Jul 1, 2020
    AKUMATOTENSHI and Sequoia1321 like this.
  7. It's been going strong recently. I got one contract yesterday at the open, but wonder if it'll be some pullback if it reaches 2. Thinking about reversing my position there for a quick pullback.
     
    Last edited: Jul 7, 2020
    #17     Jul 7, 2020
  8. Cannon_Trading

    Cannon_Trading Sponsor

    If we close above 1.910 today could signal additional short covering/ fresh longs to 2.03/2.23.
    The blue square ALGO which appeared yesterday after the close "usually" gets some continuation to it......
    upload_2020-7-7_9-41-3.png
     
    #18     Jul 7, 2020
    Sequoia1321 and Axon like this.
  9. I think we're looking at different charts. My chart shows multiple bounces off 2.0 from below since Feb, while yours is above 2.0 until May. Here's what I've been looking at:

    [​IMG]
     
    #19     Jul 7, 2020
  10. Cannon_Trading

    Cannon_Trading Sponsor

    @Sequoia1321 I am using equalized Active Continuation chart settings. My guess is you are using the actual Aug. contract straight through
     
    #20     Jul 7, 2020
    Sequoia1321 likes this.