Matt Millar Profile picture
Dec 22 6 tweets 3 min read
MANIPULATION - how can natty be selling off in the middle of an arctic blast?!?
1) Wx traders trade long range forecast - that's hot
2) A steep FJ calendar spread is bearish in Dec
3) Historically oversupplied

A thread

1/
#natgas @Ronh999 @DoombergT @NatGasGuy1 @AndreasSteno
Although it is cold, that was priced in a week ago. The long term forecast is HOT - natgas wx traders are trading changes in the 6-16 day forecast, because that is where most of the forecast volatility is.
2/
A steep January/April backwardation in the futures strip at the end of November is a significant predictor of negative price action in December. I wrote a post on this a few weeks ago.
3/
Supply is ~ 5 BCF/day more than demand, excluding weather and seasonal effects. This is historically oversupplied - only January 2009 challenges it. This is actually correlated with the steep F/J spread since all that fear creates extra supply (insurance).
4/
markets are a beautiful thing - in this case they ensured we all stay warm this winter!
axes are log differences

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