Kinda showing off here.
With Thursday's storage report guaranteed to show a drawdown the question becomes "how much of that is in the price?"
The run from $3.7250 on Nov 20 to this morning's $4.2870 is only 15% but because of the leverage afforded by the 16:1 value/initial margin each contract profits $5620 on $2310 in 20 days.
As the retail guys say: "Mr. Bigg, if you annualize that..."
Anyhoo, there are a couple gaps on the chart that may become targets should the momentum fade and then reverse. He who fights and runs away lives to run away some more. $4.2730 last.
From the CME:
Nat Gas adding to yesterday's gains
Yet another storm is set to hit the east coast today keeping Nat Gas futures and cash prices firm. The spot Jan Nymex Nat Gas futures contract is now closer to testing the next resistance level of $4.30/mmbtu after strong upward moves yesterday. Overnight prices remained steady and actually added a tad to yesterday's move higher. The market is in a technical and fundamental uptrend that began in early November with the Jan price bottoming at $3.465/mmbtu. This has been a strong move higher with the spot contract gaining almost $0.85/mmbtu.And from FinViz, the 5-minute, the unfilled gaps referred to are back on Nov. 26 and Dec. 6 ie not on this chart:
On a continuation chart basis the last time the spot contract traded at the current level was at the end of May. With cold temperatures projected for the next week or so the market should remain relatively firm. The said the latest NOAA six to ten day and eight to fourteen day forecasts are showing signs of moderating. The shorter six to ten day forecast is still projecting below normal temperatures across about a third of the country from the upper mid-west to the northeast while a major portion of the rest of the country is expecting above normal temperatures.
The eight to fourteen day forecast is showing only a small portion of the very northern Midwest and New England areas expecting below normal temperatures with about 70 percent of the country expecting above normal temperatures well into the second half of December. Based on the latest temperature forecast heating related Nat Gas demand is likely to be below normal during the second half of December and should serve as a cap to the current price rally at a minimum.
Production of natural gas in the Marcellus region, located in Pennsylvania and West Virginia, is expected to exceed 13 billion cubic feet per day (Bcf/d) this month, based on estimates in the U.S. Energy Information Administration's latest Drilling Productivity Report (DPR), which will be released later today. The Marcellus region, which produced less than 2 Bcf/d as recently as 2010, is expected to provide 18% of total U.S. natural gas production this month. The total natural gas production estimate is marketed production, while the DPR estimates gross withdrawals, so coming up with a precise percentage is difficult. The rise of Marcellus production in both absolute terms and as a share of total U.S. production is a key development in a rapidly evolving U.S. natural gas market.
This week the EIA will be releasing their weekly Nat Gas inventory report at its regularly scheduled day and time at 10:30 AM on Thursday. The report will be reflective of moderately cold temperatures last week which should result in a modest draw in inventories....MORE