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Weekly Natural Gas Recap - Trading The Range

May 06, 2018 9:30 AM ETDGAZ, UGAZF, UNG, BOIL, KOLD, UNL, DCNG8 Comments


  • Natural gas prices finished the week lower by 2.17%.
  • The summer gas trading is all about defining the price range and trading on it.
  • Fundamentals did turn bearish, but we think it's mostly priced in as prices reach the lower price band.
  • We think mother nature could give it a positive boost in the coming weeks.

Welcome to the weekly natural gas recap editionof Natural Gas Daily!

Natural gas prices finished the week lower by 2.17%.

In our public articles last week, we disclosed that we were long DGAZ going into the weekend. And on Monday following the price drop, we disclosed that we have now exited our long DGAZ position for a return of 11.42%.

But following the release of our Monday NGD, we received a lot of questions on why we were closing our short position at a time when we said natural gas fundamentals are turning bearish?

Because in summer gas trading, it's all about figuring out where the "price band" is. As we explained in our exclusive dailies to HFI Research subscribers this week:

The logic of going long here has nothing to do with fundamentals, but everything to do with the price band trading effect.

Traders looking at trading natural gas on fundamentals during this time of the year will be more often confused by the logic of the market. One day, it's up 2%, the next, it's down 2%. The market is trying to find where the natural state of buyers and sellers are willing to step in at without fundamental forces dictating the action.

Now, of course, the price band is determined by fundamentals such as where is storage, what is production, and what does the implied balance look like. But the price action of natural gas is solely determined by the price for the time being.

As time goes on, the more and more the price band gets tested, the more concrete these price bands get. This is also why traders were saying yesterday that the $2.75/MMBtu needed to be retested many times over before it can be called a new floor.

Following the bearish EIA natural

This article was written by

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HFIR Natural Gas prides itself in offering variant perception investment research in macro natural gas analysis.

Due to high demand for HFI Research's natural gas premium only offering, we have decided to launch a cheaper premium service, HFI Research Natural Gas, for natural gas followers.


HFI Natural Gas Premium will offer the current exclusive natural gas content HFI Research subscribers currently receive, they include:

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HFI Research Natural Gas will not include the other benefits HFI Research subscribers currently receive, and for those interested in our full offering, you should visit our main page for information:


Analyst’s Disclosure: I am/we are long UGAZ. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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