From storage to weather, rig count and pricing, natural gas is a market for some of the most imaginative bets. And like any card game, the House will almost always have a better hand than yours, no matter your smarts.
The casino analogy somewhat explains what is probably the most beguiling energy trade now — regardless of the data, fundamentals, and animal spirits at work, getting the gas market to do your bidding is never easy.
On the contrary, it is more likely to do “its own thing” week after week, sometimes month after month. The clearest instance of this is the mid-$2 chokehold that we have seen applied to gas futures on the New York Mercantile Exchange’s Henry Hub since the year began.
No matter the heat (Texas had a record bake almost the entire summer), no matter the power burns (consumption numbers were often off the charts on many weeks as Americans cranked their air-conditioners to the hilt), and no matter how sharp the decline in both gas and oil rigs (with the latter producing ‘associated gas’ as well), one had to be prepared to be surprised by the lack of any surprise in gas pricing.
And it’s not just longs in the game who were frustrated in their attempts to get the market to $3 and above (last week’s stray shot into that zone when the hub’s front-month reached $3.02 will be remembered for its anomaly).
Shorts were equally denied the opportunity to profit wildly with their dream of driving the market to $1 levels.
In that sense, natural gas is probably the best equalizer out there among markets now. Its directionless state is the sum collective of individuals working to counteract one another, with only the most ‘deserving candidate’ getting a pass.
It’s the exact opposite of oil, where a power-drunk
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