Natural Gas Price Prediction – Prices Tumble as Hedge Funds Add to Short Positions

The weather is turning colder than normal
David Becker
Panorama of oil and gas central processing platform in sun set where produced, treat the hydrocarbon then sent to refinery , petrochemical , power generation plant and tanker barge for export.

Natural gas prices tumbled on Monday which was likely due to a couple of factors. There are currently no storms in the Gulf of Mexico, and nothing is shown as a tropical disturbance in the Atlantic. As of Friday, there was a tropical storm in the Gulf of Mexico that has dissipated. The weather is expected to be warmer than normal over the next 6-10 and 8-14 days according to the National Oceanic Atmospheric Administration. Hedge fund traders added to their short position in futures and options according to the most recent commitment of trader’s report.

Technical Analysis

Natural gas prices reversed course and tumbled on Monday dropping more than 3%. Support is seen near an upward sloping trend line that comes in near 2.20.  Resistance is seen near the 10-day moving average at 2.28 and then the October highs at 2.38. Short term momentum has turned negative fast stochastic generated a crossover sell signal and is accelerating lower. Medium-term momentum is flat as the MACD (moving average convergence divergence) is moving sideways. The MACD histogram is printing near the zero-index level with a flat trajectory that points to consolidation.

Hedge Funds add to Short Position

Managed money continued to add to short position in futures and options betting that natural gas prices will continue to decline. According to the most recent commitment of traders report released for the date ending October 16, 2019, hedge funds added 26K contracts to short position while reducing long position in futures and options by 1.1K contracts. The current open interest shows that managed money is now short 301K contracts compared to long 105K contracts providing an opportunity for a potential short squeeze.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.