Waiting for Godot...
Nymex natural gas never looked weaker at the end of last week. Analysts at The Schork Report changed their technical bias to bearish on August 06th. Since then, the spot contract for November delivery has closed lower in 24 of 39 sessions (62%) with an average loss of $0.07 per dekatherm, per session.
Of the 15 sessions when the contract finished higher the return was only $0.05 per dekatherm. To wit, the bearish skew has been dramatic as the contract has dropped from a peak settle on August 06th at $4.727 to last Friday’s $3.797 close for a drop of 20%.
Be that as it may, at some point we do expect this market to rally… as it normally does prior to the winter. Even last year, when a number of underground storage facilities were at capacity and the economy was in the tank, the market rallied. Even to the point where some large fund was reported to have purchased $9 million worth of winter gas $10 strike calls.
All for naught, as winter gas peaked on January 07th at $6.108. To add insult to injury, that peak occurred despite one of the strongest (if not the strongest) heating demand seasons for natural gas ever recorded.