Sunday, June 12, 2011

More Natty

Zero Hedge posted; 
Goldman Goes Short Nat Gas


" In addition to the transient nature of the demand support from weather and nuclear outages, we expect the underlying balance to soften in response to the higher  prices, as production growth is further incentivized and price-induced coal-to-gas substitution diminishes. Accordingly, we recommend going short the October 2011 NYMEX Natural Gas contract, at an initial price of $4.84/mmBtu." Translation: Goldman is now buying nat gas."

 Hmmm maybe.
Though the long term trend down is arguably showing evidence of a reversal after a lengthy basing period.
NGV11 Weekly
click to enlarge

Something different in the very interesting Open Interest this week as well; 

Maybe that spec net positive Open Interest is an anomaly, but on the other hand, it's been a long time coming. See the Mar. 9 post
Natural Gas Update
 Daily

Very short term it would be expected that NG would have to re explore the area traversed by the
Freak Out! last Thur.  In the Oct contract, that was 5.00 to 4.50, and that action was so fast the time needed to spend within that range may well be extended.
Additionally as noted elsewhere on this blog, I am generally quite bearish on commodities etc. and a sharp sell off there could well pull Natural along.
But....
For now see pullbacks toward 4.50 as buying opps. 
And after some consolidation, new highs over 5.00 would raise some serious red flags for the bears.


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