UN-NATURAL NATURAL GAS
Natural Gas has had a very interesting week especially after the settlement at the $2.4 price zone.This was a major 'bluff' for most speculators I must say.
As we look into the 25 year chart,observation has been;
Whenever Spot price goes below $2, it rebounds quickly.The longest sustained period below $2 is 9 months.
There is a support zone at the $1.8 to $1.6 area being observed here.
A cyclical buying opportunity might just be on the way.
Recall the words of T.Boone Pickens,he stated : You can't invest in Natural Gas on a daily basis,Its too volatile,but if you think of Natural Gas a long-term holding,then you push your profit horizon out.
A long term time horizon would be at least two years.
I've attached a chart of what the back-adjusted continuous contract looks like,correlate it with the statement above and you realise that you can't just buy and hold because the price is low.
Chatter from various platforms suggested a solid 'bottom' however this floor has been shattered several times as last weeks closing price went -7% trading at $2.228 with a high price of $2.420 on the daily charts.
The feeling resonates to 2019, the fall wasn’t as much as a percentage, but we were $4s in October to December 2018 and then basis blew out in the areas we played in and we went sub $2 for most of the year 2019.
Averaged pricing was at $1.65 for the year.
On the Options side concerning #NG ; there are about 30,000lots of Short puts sitting & asking to get picked off from here to $2 as the chart suggests.
This should be some variable to look at as the 'lemon squeeze' is to the last drop.
We have seen what #WTI & #BRENT did some while back,how low can it go ?
We wait for the US Markets to get back online after the Monday holiday for clarity on the matter,quite foggy at the moment.
Sometimes sitting ducks lay eggs too,be patient to get the resolve on the matter.
Good week ahead.
Andy Warr,
TophatFinanceGroup.
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