Will Natural Gas Ignore Mother Nature?
Satendra Singh | Feb 01, 2018 08:53AM ET
Natural Gas seems to be preparing for a surprising move following today's natural gas storage report. I expect sudden bouts of selling despite positive fundamentals, with the post-announcement trend moving in the opposite direction after the data is released.
I find the announcement of less withdrawal for the week of January 26 has already been factored into the price at the close, despite the fact that gas stockpiles during this winter are at the lowest end of a five-year range. Secondly, contradicting weather reports result in speedy moves in futures prices, proving to be a game changer. Every fundamental is being ignored.
Historically, it has become a convention that if natural gas prices drop substantially before an inventory announcement, most of the times an opposite upward trend is in the cards afterwards.
I find that moves such as prompting artificial selling to take long positions after the weekly inventory announcements, or the opposite, are processes that disregard all fundamental and technical equations. This also poses a threat for small-scale traders or investors, who risk losing hard-earned money.
I do not know how long these dynamics will go on. But I wonder how long natural gas prices will be able to ignore Mother Nature.
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