Gas Petrospective – August 16, 2010
Natural gas prices took back the three cents (it was 3.2 cents, actually) on Friday that they had lost on Thursday, as traders covered short positions. There was a sense that we could return on Monday to a tropical or temperature forecast that could change the picture, and it is thoroughly normal for traders to cover some shorts on any Friday in the summer in this market.
Prices had declined from major resistance at $4.98-$5.01, after the front-month September contract reached a high of $5.007 on August 3rd. Prices finished nearly 68 cents per million Btu lower on Friday, after heavy fund selling pushed quotes lower. Abundant supplies and diminished industrial demand were apparent reasons.
Going into the weekend, though, funds were covering lightly, on the off-chance that we could return on Monday to find a new set of weather factors. First among the fears was that we could return to a tropical development of some kind. A close second fear, though, was that we could return to a fresh heat wave. We have just had the second hottest July on record (1998 was hottest and records started more than 100 years ago).
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