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  • Universal Secret Hiding In The Gas Futures Market [View article]
    Thanks for all of your comments. The ones about slippage in the ETFs is particularly noteworthy. I call it leakage. These ETFs do not follow the price of natural gas one for one. The correlation is closer to 60% and then you have to factor in rolling over the contracts which further distances the price of the ETF from the price of the commodity.

    As for our view on natural gas, we believe there is ample supply. Consider how much is still being flared into the atmosphere and not being captured at all and you will see that the commodity is still not "precious". Additionally, the rig counts for drilling gas have not picked up yet and are still weighted towards oil and liquids.

    The recent spike is just that, a spike, in our opinion driven in part by over zealous traders looking for "the spike" just as they do after a major hurricane or in advance of one. The difference is that today there is a lot of supply and spikes like the one we saw will be short-lived. Our price projection, that we made more than a year ago is for natural gas to settle into a trading range between $4 and $6 for the foreseeable future based on supply and demand dynamics. A spike to $5 or $6 doe snot constitute a true trading range, but a spike.
    Jan 30, 2014. 12:52 PM | Likes Like |Link to Comment
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