Natural gas short sellers getting hammered today - Jan 27

[dan_s]

The FEB22 NYMEX futures contract expires today. Shorts must cover or take delivery.
FEB 22 spiked to over $7.34 and the last trade was at $5.90.

MAR22 trading at $4.39

Mother Nature can be a bitch if you short heating fuel contracts in January.

[Fraser921]

Aren’t the Ep hedgers big shorts?
I hope they didn’t take it on the chin

[dan_s]

These are not upstream companies because they could have taken delivery. These are speculative "paper traders" that got caught with too many long positions.

Also, the storm moving up the east coast is likely to send spot market gas prices in New York and New England over $20/MMBtu. Our gassers with unhedged gas might be able to take advantage of the situation. RRC has an outstanding marketing group.

[Fraser921]

Dan, If an upstream company that hedged their production with a swap at 3.00 and the month closes at 6.25, they have to pay out 3.25 to settle the hedge. No ? On the other side they didn't sell their gas at 6.25 the whole month of January, maybe they got 4.00. So in this example , they sell their gas at 4.00 and have to pay out 3.25, they are left with a realized price of .75 cents. Someone got burnt this month and I'm afraid its anyone that that had hedges on , in addition to some trader caught in a short squeeze on the last day.

Today's settlement price is used to settle those swaps, no??

[dan_s]

But... Upstream companies with good marketing teams (AR, CRK, CTRA, EQT and especially RRC) can sell their uncommitted gas into the spot market at much higher prices than NYMEX strip prices. The winter storm heading up the east coast will cause some BIG spot market prices.