This is our weekly contribution to the Rose Commodity Group Website. SMC is a Commodity Trading Advisor (“CTA”) registered with the CFTC specializing in natural gas futures movement. The goal of our SMC Natural Gas Advisory service is to provide the best advice on natural gas market movement in order for clients to establish the most beneficial hedging or speculative market positions possible as well as thoughtful insight for physical traders. We have been producing our standardized SMC Report Service since 2003, and clients have included hedgers and physical traders in end-use businesses such as agriculture, fertilizer, manufacturing, steel and other metals, paper, etc., as well as large natural gas producers, electric utilities, banks, gas marketing companies, and hedging institutions. Clients have also included speculators such as commodity funds, hedge funds, large banks, and high net worth individuals. In summary, we serve those entities that have a large exposure to upcoming movement in NYMEX natural gas futures and look to establish the best market positions possible. If you’d like to examine or compare our work, contact us at SMCnatgas@aol.com or (501) 240-6700. We provide snippets each week for the Rose Commodity Group Website. These brief comments are general market thoughts and should not be relied on for trading purposes.
Our approach to the market involves seasonal tendencies, fundamentals, experience, history, and technical considerations. It was developed and validated with very profitable, speculative trading experience that spanned 13-years.
This Week’s Market Comments:
In our seasonal approach to the market, we break the year down into 4 seasonal periods. We have now moved into the January-March winter period in which market decline is the predominate tendency. In late December, we had put forth expectations for several market swings in the winter period which are discussed fully in our monthly and weekly reports. Our assumptions going in were that we would eventually see some more arctic weather but that the crucial late December through late January period looked to be much milder than last year and create some very large improvement in the year-on-year storage comparison.
As to the current situation, as anticipated, the first winter seasonal market swing was to the upside, as we had thought, and actually topped out in the mid to upper $3’s as we had targeted. After achieving $3.722 on January 15th, it has drifted all the way back into the $2.70’s with only a relatively brief counter trend rally to $3.207 on the way, when the brutal cold of last week was imminent. With the market unable to rebound any further than $3.207 going into the brutal cold, it definitely appears that another material upward swing is not in the cards and that the market is now already engaged in our anticipated February or March downward swing that we had put forth in our expectations. If anything this swing is underway somewhat earlier than we anticipated. Please review our full body of work as to our thoughts on how deep and how long this decline might go.
As to the coming week, the NYMEX natural gas futures market is currently resting about 44-cents lower than the previous week at $2.734 after a week where it first gapped lower by 26-cents to open the week at $2.921 and then, after chopping between $2.789 and $2.983, ended the week by trailing off to the downside and a low of the week at $2.73. With the market now showing little weather response unless there is a brutal arctic outbreak on the way, we look for seasonal tendencies and a loose supply/demand to prevail and provide some continued downside in the week ahead.
Much more detail on projected price level and timing of market movement for our entire January-March winter season is included in our SMC Natural gas advisory reports. These can be sampled by contacting us at (501) 240-6700 or SMCnatgas@aol.com.
Bio of SMC natural gas advisory service:
SMC is registered with the Commodity Futures Trading Commission ("CFTC") as a Commodity Trading Advisor ("CTA"), and as such, it has had the ability to trade speculatively for others and to provide advice to outside entities in regard to movement in NYMEX natural gas futures. At this time, SMC is solely engaged in the latter activity.
SMC was incorporated in 1988 and business endeavors have included founding, growing, and selling a natural gas marketing company, speculative futures trading, and, since 2003, a natural gas futures advisory service specializing in upcoming market movement. All endeavors with SMC have been successful with speculative proprietary trading activity especially so. As such, SMC market perspective and advice is backed with a successful track record in natural gas futures that began in 1991. Please feel free to call or email SMC with inquiries or questions at (501) 240-6700 or SMCnatgas@aol.com.
The market information and recommendations contained in this report represent the general opinions of the author and are not considered specific for any of the readers receiving our work. There is no guarantee of a successful outcome on any actions taken by readers. Such opinions are subject to change without notice. Principals and employees of SMC may or may not trade in the commodities discussed in this letter, taking positions similar or opposite to the positions discussed herein. The information contained in this letter is taken from sources we believe to be reliable, but it is not guaranteed by us as to the accuracy or completeness thereof and is provided to you for information purposes only. Commodity trading involves risk and is not for everyone.
This Market Report constitutes copyrighted material and may not be reproduced in any manner, either in part or in whole, without prior written consent from Rose Commodity Group. However, redistribution via forwarding of the full link to the report is permitted. Quotations (limit 3) from the report are permitted, so long as they are accompanied by attribution to Rose Commodity Group and a link to the full report.
This publication is presented for informational purposes only. While the information contained herein is believed to be accurate and factual, the possibility of error exists. Commodity trading is an inherently risky proposition and there is no guarantee that trades based on the information enclosed herein will result in profitable outcomes.
This post was written by Louis Rose