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Nat Gas Bullish , not Bearish!


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Nat Gas Bullish , not Bearish!

  #101 (permalink)
 jokertrader 
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to see if we continue withdrawal trend or it goes against..
weather still not made up its mind if its spring

anyway on extended holiday for a few weeks.. so just watching

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  #102 (permalink)
 jokertrader 
NYC, NY
 
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Can someone explain how to interpret the
a) Nat Gas Curve
b) Calendar spreads

to try to see what effect there might be on the front month futures

alternatively.. is there a good comprehensive book that discusses this and calendar/flys in Nat Gas..

Side note: Do prop firms trade the exchange traded flys? or do they make synthetic flys out of Calendars? and is there any material that discusses how to look for anomalies for a mean reversion trade?

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  #103 (permalink)
 
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 SMCJB 
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Sorry @jokertrader but I don't have the time to answer this with the time it deserves. If you search on the site though you will find I have answered similar questions several times.

jokertrader View Post
Can someone explain how to interpret the
a) Nat Gas Curve
b) Calendar spreads

We consume use less NG in the summer than we produce, and use more in the winter than we produce. Hence we store massive amounts of gas for half a year. As such one of the key things the NG forward curve shows is the ecomomics of storage (K vs F) and the expectation of us having enough gas to get through the winter (H vs J).
Hedge Hogs: The Cowboy Traders Behind Wall Street's Largest Hedge Fund Disaster

jokertrader View Post
to try to see what effect there might be on the front month futures

Front month is heavily effected by short term fundamentals, while the forward curve is more effected by long term fundamentals. When looking at the forward curve I find it helpful to look at calendar spreads rather than outright prices. See some of my crude posts in the crude thread.

jokertrader View Post
alternatively.. is there a good comprehensive book that discusses this and calendar/flys in Nat Gas..

This DOES NOT address what you are asking about, but a widely referenced (but now very old) book on NG trading is Trading Natural Gas: Cash, Futures, Options and Swaps

jokertrader View Post
Side note: Do prop firms trade the exchange traded flys? or do they make synthetic flys out of Calendars? and is there any material that discusses how to look for anomalies for a mean reversion trade?

Flys are traded a lot more in non-seasonal products than seasonal ones. CME does list exchange traded flys for NG, but not many of them and they dont trade much. In my experience the exchange traded flys in both NG and CL are less effective than trading the synthetic's. ie a good spreader will get you filled before the exchange traded one's do. (but good spreaders aren't free!)

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  #104 (permalink)
rajab
westhills california US
 
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What is going on with NG?
Anyone selling Calls yet or wait till mid June. What to look for? rather than getting analysis paralysis.
I am trying to figure out this commodity, among others any pointers?

Thanks

Babak

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  #105 (permalink)
 ron99 
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rajab View Post
What is going on with NG?
Anyone selling Calls yet or wait till mid June. What to look for? rather than getting analysis paralysis.
I am trying to figure out this commodity, among others any pointers?

Thanks

Babak

NGk7 is expiring today. Things usually get crazy on expiration day. I will be selling more calls today.

Edit: I sold NGq7c450 for 0.014 at 14:20 ET today.

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  #106 (permalink)
 myrrdin 
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ron99 View Post
NGk7 is expiring today. Things usually get crazy on expiration day. I will be selling more calls today.

Edit: I sold NG7c450 for 0.014 at 14:20 ET today.

Are you expecting lower NG prices to add some puts later ?

Best regards, Myrrdin

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  #107 (permalink)
 pugpack 
Blue Ridge Mountains, Georgia
 
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rajab View Post
What is going on with NG?
Anyone selling Calls yet or wait till mid June. What to look for? rather than getting analysis paralysis.
I am trying to figure out this commodity, among others any pointers?

Thanks

Babak

There are a lot of moving parts other than the weekly EIA inventory reports. - Weekly Natural Gas Storage Report - EIA


For good Nat Gas information I recommend this site.
CelsiusEnergy

Good Luck
Pugpack

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  #108 (permalink)
 ron99 
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myrrdin View Post
Are you expecting lower NG prices to add some puts later ?

Best regards, Myrrdin

Maybe

EDIT: Sold NGu7p260 puts today

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  #109 (permalink)
 
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 SMCJB 
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myrrdin View Post
Are you expecting lower NG prices to add some puts later ?

LNG exports are growing, and swinging the supply/demand imbalance back the other way. Despite a warm winter, we enter the injection period with stocks significantly below last year, and a lot closer to the 5 year average.

In the Natural Gas market there is a product called Basis. Basis is the differential between a specific location in the country and the delivery location for futures in Louisiana. Right now with the exception of Boston (Algonquin) and San Francisco (PG&E), basis for all other non-Gulf Coast locations is negative. ie Natural Gas across America is worth less than it is down in Louisiana. This is in stark contrast to history, where basis for most of the country was higher than the Gulf Coast representing the cost to transport gas away from the producing area's (TX, LA etc) to the market area's (Midwest, Northeast etc.). What changed in the last several years? Well obviously Shale Gas brought on a lot of supply, and supply that is in many cases closer to the market than TX & LA, but also LNG exports. A lot of that gas that used to flow up pipelines to the NE, now is exported.

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  #110 (permalink)
 ron99 
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SMCJB View Post
LNG exports are growing, and swinging the supply/demand imbalance back the other way. Despite a warm winter, we enter the injection period with stocks significantly below last year, and a lot closer to the 5 year average.

In the Natural Gas market there is a product called Basis. Basis is the differential between a specific location in the country and the delivery location for futures in Louisiana. Right now with the exception of Boston (Algonquin) and San Francisco (PG&E), basis for all other non-Gulf Coast locations is negative. ie Natural Gas across America is worth less than it is down in Louisiana. This is in stark contrast to history, where basis for most of the country was higher than the Gulf Coast representing the cost to transport gas away from the producing area's (TX, LA etc) to the market area's (Midwest, Northeast etc.). What changed in the last several years? Well obviously Shale Gas brought on a lot of supply, and supply that is in many cases closer to the market than TX & LA, but also LNG exports. A lot of that gas that used to flow up pipelines to the NE, now is exported.

Last year's inventory was atypical. 2017 for last week is +15.8% vs 5 yr avg.





11 of the 16 weeks this year have had a higher build or lower withdrawal than the 5 year average.


Charts available here. Energies-Natural Gas-US Inventory
https://public.tableau.com/profile/ron.h8870

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Last Updated on April 26, 2018


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