The spike in price came out of nowhere and in the process several hedge funds and pension funds suffered major losses. One hedge fund making major headlines was James Cordier, of Optionsellers.com His hedge fund blew up and he lost all of his client’s money selling naked calls on natural gas futures when price shot up nearly 20% in a single afternoon.
I honestly thought, price would move higher before it moved lower in the near future due to price momentum, natural gas lower than expected inventories and winter is just starting. This was a case where I was going with what I thought, instead of what the charts were telling me. Price was in the highest time frame supply and since than, prices have collapsed.
According to the US Energy Information Administration, they are forecasting oil production from major shale formations will climb to a record 8.46 million barrels/day.
Natural gas is a by-product of oil exploration and there is so much natural gas that the abundance that the pipelines are at capacity. So as the oil is being pumped out of the ground, the shale companies just burn it off.
The activity in the shale region has depressed the price of natural gas for years. And this theme continues in 2019. Prices are down 14% in 2019 and at three year lows. So can prices go any lower, lets go to the charts to find out…this time ignoring the news.
The chart suggests to go long when price enters the daily demand at $2.45. What I also like about this set-up is , its a Bear Trap…and the news at the moment is negative.
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.