duc's Commodity Trading Thread

[ducati916]

NGas up 6% in the futures atm.

No idea why.

jog on
duc

 

[Austwide]

Northern hemisphere winter starting, maybe?

 

[ducati916]

Northern hemisphere winter starting, maybe?

Indeed: added to a colder than expected forecast. So nothing particularly exciting.

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duc

 

[peter2]

NGas up 6% in the futures atm.

@ducati916 Thanks for drawing my attention to the spike in Nat gas futures last Friday.
I looked at the UGAZ ETF and saw there was no corresponding spike. Forgot about it. Next day UGAZ spiked up and like the futures market continues to rally on the expectations of a colder winter. Did I miss a good opportunity to get in early? I probably didn't as it's unlikely nat gas futures spiked up and UGAZ didn't respond immediately.

There must be an anomaly (that I don't know about) with the time stamp of the ASF posts.


I just wanted to thank you for posting the abnormal spike (movement) in the markets you watch. Many times an observation like this has lead to a good trade opportunity.

 

[ducati916]

@ducati916 Thanks for drawing my attention to the spike in Nat gas futures last Friday.
I looked at the UGAZ ETF and saw there was no corresponding spike. Forgot about it. Next day UGAZ spiked up and like the futures market continues to rally on the expectations of a colder winter. Did I miss a good opportunity to get in early? I probably didn't as it's unlikely nat gas futures spiked up and UGAZ didn't respond immediately.

There must be an anomaly (that I don't know about) with the time stamp of the ASF posts.
View attachment 98334

I just wanted to thank you for posting the abnormal spike (movement) in the markets you watch. Many times an observation like this has lead to a good trade opportunity.

Peter2,

The UGAZ and GASL ETF's tend to lag the futures somewhat. The oil ETF's can also have some odd movements. For example USOU tracks USO which tracks the futures. USO has some funny habits also.

Sometimes the lag can work in your favour.

jog on
duc

 

[ducati916]

Natural Gas continues higher. This commodity is famous for short squeezes. No idea if one is in progress atm (unlikely as price is just inching higher) but if it keeps going, one might eventuate.

jog on
duc

 

[ducati916]

So re. my oil position:

Purely on a technical basis, volatility since 10 June has been contracting. Oil now sits in a compressed range with accumulated volume on both sides of the trade.

Once something 'happens', whatever that something is, volatility will expand and POO will expand in a direction and have the additional buying/selling of those positioned incorrectly.

Worst downside could be $30 but I'd be more inclined to $40. But it will not sit there indefinitely.
Upside: best could be $80 and if it blows through $60 then $80 is really on the cards. Again, probably won't stay there for an extended period.

So: if down to $30/$40 add to position.
If up to $80, lighten position.

jog on
duc

 

[ducati916]

So re. my oil position:

Purely on a technical basis, volatility since 10 June has been contracting. Oil now sits in a compressed range with accumulated volume on both sides of the trade.

Once something 'happens', whatever that something is, volatility will expand and POO will expand in a direction and have the additional buying/selling of those positioned incorrectly.

Worst downside could be $30 but I'd be more inclined to $40. But it will not sit there indefinitely.
Upside: best could be $80 and if it blows through $60 then $80 is really on the cards. Again, probably won't stay there for an extended period.

So: if down to $30/$40 add to position.
If up to $80, lighten position.

jog on
duc

So some 'lucky' news for POO. See how far the news will take it.

Opened a position in NG (on Friday). Might have to sit on it for a little while as sentiment is lacklustre atm. But I like this position going forward.

jog on
duc

 

[ducati916]

Added NG on this big down day.

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duc

 

[ducati916]

Natural gas prices sink on mild weather. Natural gas prices fell further on Monday on forecasts for warmer weather. Prices fell to $2.232/MMBtu, down 4.4 percent. Prices are now down by roughly 50 percent from a year ago.


Just accumulating a position down here.

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duc

 

[ducati916]

The long setup signals are starting to pile up.

For the natural gas bulls, one of the most sorely needed ingredients for higher natural gas prices is lower production.

The drop in production, combined with higher heating demand, has now pushed the natural gas market back into a daily deficit.

This, combined with TDDs slightly higher than the 30-year average, is indicating to us the natural gas market is now close to balanced with production at around ~95 Bcf/d.

As for the short-term outlook, the sustained bullish weather scenario remains elusive for now. The good news is that ECMWF-EPS will publish its latest long-range outlook today, so we will be watching that closely.

jog on
duc

 

[ducati916]

Weather-related demand swings have always been a feature of commodity markets, particularly natural gas and electricity, but the cycle of significant climate events is increasing, which could cause increased volatility in an already volatile market (NG).

The demand for heating fuels will also grow relative to growing populations who will gain access to domestic gas or LPG. Increased demand, could again, increase volatility as weather patterns become increasingly volatile, disrupting that supply.

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duc

 

[ducati916]

Natural gas prices remain depressed. Natural gas prices could fall even further unless there is a serious cold snap in the U.S. this winter. Investors have staked out the most net-bearish position on gas futures in a decade.

Interesting article. Supply will come under pressure next year most likely. Yet, bears are heavily in. NG is an extremely volatile commodity, which can really jump around.

Predicting weather. Hmmm.

I'll continue to nibble and add if price falls.

jog on
duc

 

[ducati916]

Oil rigs surged by 18 to 685 after adding 4 last week, while gas rigs fell 4 to 125 and 3 rigs were classified as miscellaneous.

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duc

 

[peter2]

@ducati916 at Just realised that Snoopy is your avatar, no wonder it came to mind as I was writing the post following one of yours. D'uh.

You're right, ETFs would be a sensible to go for a new trader starting the trade US markets. Thanks for the link to the ETF db. The number of ETFs have exploded. I might add a few more of the popular ETFs that aren't correlated to the US market to the list (MJ, EEM ?).
---

Going through my list it's clear that the US markets have bolted higher and we've missed the last bullish setups. I don't chase markets. If I miss out then so be it. My job is to make sure I don't miss the next one. We could look at the hourly charts for a setup to join this trend or we could look at a lower time frame. The smaller the time frame we look at the more likely we're going to get caught up in the daily noise. We don't want to lose a few R's by being impatient.

It would be better if we looked at others markets that have been going down, for our reversal setups.

 

[ducati916]

@ducati916 at Just realised that Snoopy is your avatar, no wonder it came to mind as I was writing the post following one of yours. D'uh.

You're right, ETFs would be a sensible to go for a new trader starting the trade US markets. Thanks for the link to the ETF db. The number of ETFs have exploded. I might add a few more of the popular ETFs that aren't correlated to the US market to the list (MJ, EEM ?).
---

Going through my list it's clear that the US markets have bolted higher and we've missed the last bullish setups. I don't chase markets. If I miss out then so be it. My job is to make sure I don't miss the next one. We could look at the hourly charts for a setup to join this trend or we could look at a lower time frame. The smaller the time frame we look at the more likely we're going to get caught up in the daily noise. We don't want to lose a few R's by being impatient.

It would be better if we looked at others markets that have been going down, for our reversal setups.

Not necessarily: Energy, which is the last sector to trend in a business cycle is still at the station.



And its X3



Lovely set-up. The low is $12.78. So $5 risk, or, try to buy a pullback (may never come) which will depend on POO.

*Although I think we will get a pullback on the first test of the 200EMA. That would (for me) be the entry point. Commodities are headed higher, specifically energy commodities. Not so much agriculture. Base metals are thinking about it.



jog on
duc

 

[ducati916]

Something up with the US $?



Or is it just thin Christmas markets?

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duc

 

[ducati916]

Added some more NG down here.

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duc

 

[ducati916]

Why?





Natural gas consumption in the United States reached a record high 83.1 billion cubic feet/day (Bcf/d), the equivalent of 31 quadrillion Btu, in 2018. Natural gas use rose across all sectors in 2018, primarily driven by weather-related factors that increased demand for space heating during the winter and for air conditioning during the summer. As more natural gas-fired power plants came online and existing natural gas-fired power plants were used more often, natural gas consumption in the electric power sector increased 15% from 2017 levels to 29.1 Bcf/d. Natural gas consumption also grew in the residential, commercial, and industrial sectors in 2018, increasing 13%, 10%, and 4% compared with 2017 levels, respectively.


Permian wells getting gassier. Permian shale wells are producing a higher gas-to-oil ratio than expected, another blow to shale drillers’ profits. “Activity levels are no longer what they were,” said Artem Abramov, head of shale research at Rystad Energy. “The oil ratio is no longer sufficient to offset gas in older wells, so we’re seeing some increase in basin-wide” gas-to-oil ratios. The focus on the Delaware sub-basin is also contributing, as that area is gassier.


Bank lending to Permian slows. Lending to oil companies in the Permian is slowing, as banks seek to reduce their exposure. Some banks are growing more concerned that the reduced value of shale assets could fail to cover for missed debt payments.

So although supply of gas is also growing, whether that gas actually makes it to market is debatable.

jog on
duc

 

[ducati916]

How (much) lower can NG go?





So while it can definitely go lower, over some time, the probabilities favour higher. NG is currently out of lockstep with POO, so a divergence currently. POO if it stays near $60 (or higher) will eventually pull NG higher.

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duc