Capitalizing on Tuesday’s downward momentum, December natural gas futures dropped another 30 cents Wednesday to close at $6.405 as rumors swirled that longs were getting squeezed out of their positions.
Longs
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Weak Longs, Warm Forecasts Usher Futures Lower Monday
Pressured by the bearish agreement of mild current temperatures and unseasonably warm weather forecasts, the natural gas futures market tumbled lower in waves of selling during both Sunday night’s Access trading and Monday’s regular open-outcry session.
Good Risk/Reward for Market Longs
If the assessment of a leading industry observer is correct, natural gas prices have fallen to the point where the potential for upside price movement is sufficiently greater than the risk of further declines.
Futures Check Lower as Traders Liquidate August Longs
The sell-off continued yesterday in the natural gas pit at Nymexas traders continued to take profits following the rally to $4.715last month. After gapping lower for the second day in a row, theAugust contract chopped mostly sideways before finishing at $3.66,down 5.5 cents for the session.
Bearish One-Two has Longs Looking for the Exit
Bulls never had a chance yesterday when natural gas futures werehit with two distinct waves of selling pressure as traders unloadedlong positions. Sources said early options-related liquidation wasreplaced by storage and market-on-close selling in the afternoon,and that was enough to delivered the expiring April contract 6.3cents lower to its final resting place at $2.90. The prompt monthin waiting, May, followed suit by also slipping 6.3 cents to closeat $2.908.
Futures Retrace Earlier Advances
Taking a cue from Wednesday’s Access trading session, thefutures market probed lower yesterday as weak longs and speculatorstook profits away from the price rally earlier this week. TheNovember contract was dealt the largest blow, slipping 13.6 centsto finish at $2.834. December closely followed by tumbling 10.8cents to $3.051.