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David Becker

Natural gas prices moved lower on Tuesday following a long holiday weekend. Temperatures in the mid-west which have shown frost are now moderating taking some of the froth out of prices. There are two tropical storms in the Atlantic, Paulette and Rene but neither are expected to go into the Gulf of Mexico and generate an issue for natural gas installations. There is a disturbance in the Atlantic off the coast of North Carolina but that is also not expected to generate an issue. Hedge funds bearly added or subtracted from their position in futures and options according to the latest commitment of traders report.

Technical Analysis

Natural gas prices moved lower dropping more than 5% on Tuesday and testing support near last week’s lows at 2.41. A break of this level would lead to a test of target support near the 50-day moving average at 2.21. Resistance is seen near the 10-day moving average at 2.57. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line).


Hedge Funds Stand Pat

According to the most recent commitment of the trader’s report released for the date ending September 1, 2020, managed money reduced their long position in futures and options by 873 contracts, while reducing short positions in futures and options by 64 contracts. Open interest that is long futures and options outnumbers open interest that is short in the managed money space by a robust 130K contracts.

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