capacity. With the Energy Administration Information’s announcement last week that supplies reached a record 3.734 trillion cubic feet, there’s not much room left to hold all the supplies, which are reaching full U.S. storage capacity,” Lee Lowell Reports From Investment U.
Lowell continues to write: “Naturally, traders have jumped on this huge supply as a “no-brainer” shorting opportunity. But as we’ve seen over the last few weeks, natural gas prices have only gone up. This leads to a few conclusions.”
1.Shorting the natural gas market was a great strategy for a year, but it’s finally reached an end.
2.No matter how bad the fundamentals may be, all the news finally gets factored into prices.
3.Winter is approaching and colder weather could draw down supplies.
4.Those who were too late to short to the market are being forced to buy back their positions.
At this point, I believe this market has finally put in a solid bottom and should see higher moves going forward. It looks like the technical side of the market is the driving force right now and with the price holding above key moving averages, we should continue to see it move upward.
Lowell explains that, “There are two ways to play the natural gas market…”
•The United States Natural Gas (NYSE: UNG) ETF. Like USO, you can play UNG directly via regular shares, or options contracts through your stock brokerage account. Be warned though: (UNG) is undergoing potential changes to its holdings profile, as the Commodity Futures Trading Commission (CTFC) is discussing possible regulatory legislation that would curtail futures contracts purchases by large speculators and impose caps on the number of futures contracts they can hold.
•Futures and futures options contracts in the commodity trading pits at the NYMEX. Once again, we recommend sticking with limited-risk option purchases or option spread purchases.
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