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Are Hedge Funds Turning Bullish or Bearish on Natural Gas?

PART:
1 2 3 4 5 6
Part 2
Are Hedge Funds Turning Bullish or Bearish on Natural Gas? PART 2 OF 6

Cold Weather Might Be the Turning Point for Natural Gas Bulls

Natural gas prices 

NYMEX natural gas (GASL) (FCG) futures contracts for December delivery rose 0.6% to $3.21 per MMBtu (million British thermal units) in electronic trading at 1:10 AM EST on November 10, 2017. In contrast, December 2017 E-Mini S&P 500 (SPY) futures contracts fell 0.05% to 2,582.25 in electronic trading at the same time.

NYMEX natural gas futures are near a six-month high. However, prices have fallen 13.1% year-to-date. Moves in gas prices impact energy producers (VDE) (XLE) like EOG Resources (EOG), Chevron (CVX), Exco Resources (XCO), and Antero Resources (AR).

Cold Weather Might Be the Turning Point for Natural Gas Bulls

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Weather forecasts 

Weather forecasting agencies expect that chilly conditions would prevail across the north-central parts of the US for several days. Similarly, the Great Lakes and eastern parts of the US might have unpleasantly cold temperatures for the next several days. The southern parts of the US might have mild weather. Overall, the US weather is expected to be cold for the next few days, which could drive the natural gas demand and gas (UNG) (UGAZ) prices higher.

NOAA predicts that the temperatures this winter will be 13% colder than last winter across the US. In contrast, the US National Weather Service predicts that the temperatures will be warmer than average this winter.

Almost 50% of US domestic households use natural gas for heating and cooling. Changes in temperatures impact natural gas demand and inventories, which impacts US natural gas (DGAZ) (BOIL) prices.

Next, we’ll analyze how inventories impact natural gas prices.

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