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Nat Gas Bullish , not Bearish!
Started: by josephBus1 Views / Replies:1,862 / 63
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Nat Gas Bullish , not Bearish!

  #31 (permalink)
Elite Member
rutherford NJ
 
Futures Experience: Intermediate
Platform: Sierra xtrader Qtrader
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Favorite Futures: NG ZS CL GC
 
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Was a warm weekend here in NJ


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  #32 (permalink)
Trading Apprentice
Cookeville, TN
 
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Yep, trading like a pennystock...so much for a "market"

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  #33 (permalink)
Market Wizard
Houston TX
 
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?

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  #34 (permalink)
Elite Member
rutherford NJ
 
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Bounce over until colder weather??


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  #35 (permalink)
Market Wizard
Houston TX
 
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Which products do you trade?

 
Apologies if this is obvious to everybody, but the underlying fundamental for NG is storage. We inject gas into the ground for 7.5/8 months a year and then withdraw it all in 4/4.5 months. This create's a very interesting dynamic in that if we don't have enough gas in storage to meet demand, Winter prices, and March pricing in particular explode. On the other hand, if we do have enough gas in storage, then the gas that is left in storage at the end of March needs to price as the beginning of next years refill, which means March drops to a discount to April. The extension of this to what a warm winter weather forecast means, should be logical. Of course the risk is the forecast changes.

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  #36 (permalink)
Market Wizard
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Chart is like a 1000 words...
(Dates are the day before contract expiration's)

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  #37 (permalink)
Membership Temporarily Revoked
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In New England, when again the snot in my nose is freezing after two inhales after going outside in the morning because the temperature is -10, I'll be wishing I was long in NG. But we'll take a look-see at the NOAA forecast this year, see how they do. I gave up on NG 18 months ago, but it's a fun side-project for me, worth watching in the winter.

Brr, it's going to be cold! Knees and joints, remember?

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  #38 (permalink)
Elite Member
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Could you please clarify if i am reading this right?

If you could, would be very helpful for novices like me

Observation 1
i can see that all lines trend up but i guess thats only the difference in price for each contract on that particular day
So the blue line is all the prices on Nov 23rd
This would imply prices keep coming down from the top blue line to the yellow/orange line on 24 Feb 2016
whereas in 2013/14 prices actually moved up (blue line at bottom)

Observation 2
in 2105/16: There is a bigger price differential between z and F and then it flattens out: this will give an indication on spread prices between months
in 2013/14, for 28 Jan 14 and 25 Feb 14, front month prices are higher since it was a cold winter and then a slow rise again whereas in 15/16, front month prices are lower than latter.. as it is now

all great.. one more quick question
is there a good place to see weather predictions to time the purchase of NG?



SMCJB View Post
Chart is like a 1000 words...
(Dates are the day before contract expiration's)

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  #39 (permalink)
Market Wizard
Houston TX
 
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jokertrader View Post
If you could, would be very helpful for novices like me

Observation 1
i can see that all lines trend up but i guess thats only the difference in price for each contract on that particular day
So the blue line is all the prices on Nov 23rd
This would imply prices keep coming down from the top blue line to the yellow/orange line on 24 Feb 2016
whereas in 2013/14 prices actually moved up (blue line at bottom)

Correct. Last winter was a warm winter and prices declined all winter until winter prices were below summer prices. In Winter 13/14 we had a cold winter and winter prices spiked significantly.


jokertrader View Post
Observation 2
in 2105/16: There is a bigger price differential between z and F and then it flattens out: this will give an indication on spread prices between months
in 2013/14, for 28 Jan 14 and 25 Feb 14, front month prices are higher since it was a cold winter and then a slow rise again whereas in 15/16, front month prices are lower than latter.. as it is now

Here's another way of looking at the same data. Remember anything below zero incentives people to leave gas in storage.

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jokertrader View Post
all great.. one more quick question
is there a good place to see weather predictions to time the purchase of NG?

Large energy traders spend a fortune on weather prediction and normally have their own multi-person weather teams.
An often quoted and reasonable free resource is the governments National Oceanic and Atmospheric Administration ("NOAA") who publish many short and medium range forecasts at Climate Prediction Center - Forecasts & Outlook Maps, Graphs and Tables

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  #40 (permalink)
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rutherford NJ
 
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Thanks how about h/u last winter? March vs sept


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