• Tony Zelinski

Natural Gas Prices To Increase After Weekend Models Indicated Colder Changes after Xmas



Summary

  • Money managed (MM) shorts continue to outweigh longs by approximately 244k contracts (654k vs. 409k); net long positions decreased 10,703.

  • Cold weather for much of this week, but a very mild weather pattern develops late this week into next weekend and will persist through Christmas Week.

  • Colder changes to the pattern possible after Christmas.


Natural gas futures settled lower Friday on increased chances for above-normal temperatures during Christmas Week

On Friday, the front-month January contract settled down 3.2 cents ($0.032) to $2.296/MMBtu, the February contract settled down 3.8 cents ($0.038) to $2.282/MMBtu, and the March contract settled down 4.3 cents ($0.043) to $2.228/MMBtu.


On Friday, the United States Natural Gas ETF (UNG), which is the unleveraged 1x ETF that tracks the price of natural gas, finished down 1.34% to $17.68.

UNG's leveraged exposure ETFs, the Velocity Shares 3x Long Natural Gas ETN (UGAZ) and the ProShares Ultra Bloomberg Natural Gas ETF (BOIL), were seen lower by 8.59% and 5.63% at $9.36 and $9.56, respectively. Meanwhile, UNG's high-beta leveraged inverse ETFs, the Velocity Shares 3x Inverse Natural Gas ETN (DGAZ) and the ProShares UltraShort Bloomberg Natural Gas ETF (KOLD), were seen higher by 8.07% and 5.51% at $155.79 and $34.86, respectively.


Mild weather pattern to be the theme for much if not all of the next couple of weeks, but there's potential for colder changes after Christmas in the 10-15 day

Over the weekend, forecast models have come to be in general agreement on the overall evolution of the weather pattern through the next couple of weeks. We will see the weather pattern on the cold side through much of this week (though nothing too extreme) before a stretch of mild to very mild weather develops late this week and persist through at least next week (week ending Dec. 27). After Christmas, during the 10 to 15-day period (Dec. 26-30), cooler changes begin taking place across the country. Overall, the eastern half of the country during this time is still on the mild side. continue reading






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