Not all energy futures are rocketing higher along with crude.
After an eight-day consolidation pattern, August natural gas futures have broken down and appear headed for another leg lower.
The fundamental story backs up the downward move. The Energy Information Administration reported a sixth consecutive week of above-average natural gas inventories, which is obviously bearish for the commodity. U.S. output has risen for six years straight, in what seems to be an enduring trend.
The real long-term bearish story, however, is mild winters and summers that don't pick up the slack. Until we can snap that streak, natural gas could trade heavy.
So how am I trading nat gas now?
I like selling August natural gas futures at $3.61 with a downside objective of $3.40. A subsequent trade of $3.67 would return me to neutral.