Where is natural gas headed?

Will it retest two dollars sometime this fall? I believe so, any opinions?

What makes you believe that it will hit $2? Do you have a chart?

The chart below is from the daily notes page for NG:

What does that chart tell me? Actually I think Nat. gas will take out April's low sometime this fall, as we are entering a normally weak quarter. The summer bounce was expected and average temperatures were above normal. There is lots of nat gas in storage, so I'm bearish! Time will tell.

How are you playing it to capture a short move based on the expectations you described?

I'm also curious MonkeyMeat.

@yarddawg: What is your entry and stop? I assume that your target is $2?

Since hnu and hnd are poor long term holds, I have decided to short hnu rather than play the hnd. Thus the long term hold will work in my favor instead of against me? I intend to take nothing off the table until nat gas reaches 2 bucks. Hopefully, I am correct? I started shorting at 15.25 and bought another chunk at 14.40. If hnu goes up this morning, I may buy another short this afternoon?

good luck

If you listen to the message of the market it looks like NG will have a real challenge getting back to $2 this fall. Look at the futures ladder. Right now (as I type this) the SEP, OCT, NOV, DEC and JAN futures contracts are priced at 2.834 (expires next week), 2.870, 3.038, 3.308 and 3.440. The market is clearly believing that inventory injections will not outpace draws to the degree they did last fall. There is also a premium in the market now for hurricanes that a short seller has to buck. The inventory report due out at 10:30 ET today will be a good tell but it feels like $2.00 in the next few months is unlikely.

Hurricane Isaac is well on his way and heading towards the gulf, but Nat gas is declining? Shouldn't there be a little bounce prestwickdrive?

I think we will likely see a bounce when futures open this (Sunday) evening but I am not sure how long it might be sustained presuming that we get it. It is a very nervous market.

The nearest month contracts are still struggling with the inventory overhang. We can clearly see that when we look at how the market dealt with last week's EIA inventory report.

The net storage injection reported by the EIA last Thursday was +47 bcf compared to an expectation of +38 bcf. That net injection well above expectations is why all of the near NG contracts fell hard immediately following the report. Then it seems that the market started to consider that the 38 bcf net injection is well less than the +66 reported the same week last year (and the 5 year average for that week of +53 bcf) That plus the potential impact of Issac and forecasts of above normal Midwest and Northeast temperatures for the next week or so all seemed to be factored in to drive prices up the balance of the day Thursday (to well above the level before the inventory impulse puke).

So why did prices retrace down Friday like you mentioned to the post inventory report low? Inventories are still about 15% higher than they were at this time last year. Also, on Friday Issac was forecast to most likely hit land as a Cat. 1 storm and track east of the oil and gas fields up the FL coast. In addition, the proportion of Gulf gas production to total US production accounts for about half of what it did just 3 years ago due to fracking technology exploitation which tempers the storm premium.

Why do I expect a futures bounce tonight? Issac is now projected to make landfall as a Cat. 2 storm and run farther west than what was expected Friday, hitting the Gulf oil and gas fields off of Mississippi and Louisiana.

Unless it becomes a slow moving storm (resulting in significant undersea collection and distribution infrastruture damage) and possibly tracks further west, I am not sure a bounce will be sustainable. That said, based on the market contango I still doubt that we will see prices as low as $2.00 this fall. Prices south of $3.00 tend to remove the economic incentive for electric utilities to switch from coal to gas. Plus, hurricane season is really just starting.

They gapped it up on the Globex open only 6 cents and then gave up half of that within 5 minutes.

Excellent post prestwickdrive!

The shorts went back on shortly after the inventory report. I see no reason to be bullish?