Energy Prospectus

Front month down 15 %

Should we panic??

I say SELL SELL RIGHT NOW!

Bonus question:

Will NG hit 1 handle before it hits 3?

Go here and run a 25 year chart.
https://tradingeconomics.com/commodity/natural-gas

To say there is a high level of volatility in natural gas prices is an understatement. Why? because the NYMEX futures market is dominated by the Paper Traders (large hedge funds). During my career, I have seen natural gas spot prices go up 1,000% from one month to the next because utilities will pay whatever it takes to meet physical demand in their regions.

What happened this morning is that the hedge funds set tight stop loss orders after the big run up in ngas prices last week. One large sell at the open triggered a lot of automated sales.

We don't have a glut of natural gas in the U.S. market. The storage level is within the 5-year range and there is plenty of space in storage.

All of our gassers are profitable at $2.50.

PS: Now you know why upstream companies hedge against stuff like this.

I guess that is why trading NG contracts is called the "widowmaker".

All I can say is that day trading any commodity futures contract is very risky. It is a lot like trading Calls and Puts. If you do it, just remember that they do have an expiration date. Never hold them to the last week before expiration.