Nat Spreads

chunked on a half position of -G/+H here today at +.024 to the G. I am working to get more on at +.04


Models are screaming pattern breakdown from W ridge/E trough, which is more in line with a strong el nino pattern such as we are in. We get back in on monday and the 11-15 has it much warmer looking, I don't care what the cold looks like in the spot day, the big boys will trade the pattern shift. I think this is a huge risk to length here.
 
Quote from PAPA ROACH:

chunked on a half position of -G/+H here today at +.024 to the G. I am working to get more on at +.04


Models are screaming pattern breakdown from W ridge/E trough, which is more in line with a strong el nino pattern such as we are in. We get back in on monday and the 11-15 has it much warmer looking, I don't care what the cold looks like in the spot day, the big boys will trade the pattern shift. I think this is a huge risk to length here.
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Well, the big pattern breakdown is not happening today. And it keeps getting colder. For a long weekend like this, it gets to change, warmer or colder. And someone/something has to give.

Same thing happened last weekend. And the NG was up $0.30 on Monday. If the cold pattern holds, the G contract should test $6 again before it rolls off.

Spreads should be relatively safe. The G/H spread should get stronger, closed at 420 and may go up to 500-700 area.
 
The next week appears that it will be as cold and in many areas colder than it is now. It will be interesting to see how the storage surplus holds up over the next few reports. The producers may be taking advantage of the colder weather to increase production. During the weekly storage report this week it was stated that more producers were establishing hedges, per John Kilduff.
 
Quote from CET:

The next week appears that it will be as cold and in many areas colder than it is now. It will be interesting to see how the storage surplus holds up over the next few reports. The producers may be taking advantage of the colder weather to increase production. During the weekly storage report this week it was stated that more producers were establishing hedges, per John Kilduff.
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If you look at the CFTC COT reports, the money managers have been covering the shorts and the producers/users have been selling into the strength.

Over the next three weeks, the total EIA draws are likely close to 600 BCFs. This will reduce the surplus by 280 to last year and 250 to 5-yr average. If the cold weather holds longer, the surplus can totally disappear by the end of winter.

Looking forward, we have a better economy, may be not that too mild summer, and not that too quiet hurricane season. If you add all up, it is not that bearish as the market says.
 
Quote from RedSun:

If you look at the CFTC COT reports, the money managers have been covering the shorts and the producers/users have been selling into the strength.

Over the next three weeks, the total EIA draws are likely close to 600 BCFs. This will reduce the surplus by 280 to last year and 250 to 5-yr average. If the cold weather holds longer, the surplus can totally disappear by the end of winter.

Looking forward, we have a better economy, may be not that too mild summer, and not that too quiet hurricane season. If you add all up, it is not that bearish as the market says.
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The big variable here IMO is how much the producers have increased production lately. If they are hedging a large portion of their production beyond capital expenditure needs then I would not expect much upside. We shall see.
 
The next few storage reports should make a big dent in the storage surplus, so this pull back in prices is interesting. Does anyone have an thoughts on pricing going forward. TIA.
 
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