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2. Hot Market Report: Natural Gas - Prices too Low?
By Mark O'Brien, Senior Broker
Click on image below to enlarge
This week’s highlighted Market is Natural Gas futures.
Natural Gas is part of the energy sector along with "it's cousins", Crude Oil, "RBOB - Unleaded gas" and heating oil. All traded on the NYMEX/GLOBEX exchange.
The undisputed king of the energy futures sector is crude oil. The West Texas crude futures contract traded on the CME/NYMEX is the largest energy futures contract in the world by volume. But, not far distant from it in terms of volume and over the last decade or so in importance, is natural gas. Coupled with its long-time use as a domestic cooking and heating fuel, its increased use in power generation has caused natural gas to surpass the heating oil and unleaded gas futures contracts in terms of trade volume. And because of its tendency to follow annual seasonal patterns – and occasionally sharply deviate from them – non-commercial traders have become growing participants in the natural gas futures market.
These are exceptional times for natural gas futures. With the exception of a brief foray to all-time lows (Oct.–Nov. of ’15) the price of the December ‘19 contract for the leading NYMEX futures contract – Henry Hub natural gas – is trading near lows not seen since 2001.
The heating season for natural gas typically begins in November. All summer the industry accumulates inventory during the summer. In depth analasys to follow next week in a special edition of our blog next week!!
Natural Gas Futures Specs. (this market also offers a mini Nat Gas futures contract which is half the size) Hours: 5:00 PM to 4:00 PM the following day, Central Time
Margins: $2700 initial, $2500 maintenance ( as of the date of this newsletter)
Point Value: full point = $100 ( Example: 404.0 to 405.0 ). Min. price fluctuation is 0.1 = $10 ( Example: 404.1 to 404.2)
Settlement: Physical, deliverable commodity
Months: Monthly cycle, All Months
Some of the basic fundamentals to keep in mind when you are considering trading the Nat Gas market:
1. Longer term view of current market prices
2. Supply and Demand
3. Seasonality, i.e. heating and cooling cycles
4. Be aware of Thursday morning’s EIA gas storage report at 9:30 AM CDT
Our brokers here at Cannon will be happy to chat about the Natural Gas market, other energies, other futures, options, futures spreads and much more!
Feel free to contact us at any time.
9:00 AM CDT - Univ of Mich Consumer Sent-Final(Oct)
2:00 PM CDT - Cattle On Feed
LT: Oct Bitcoin(CME)
Nov 2,5,10 Year Notes Options(CBT)
Nov Bonds Options(CBT)
Nov Canola Options(CBT)
Nov Wheat Options(CBT)
Nov Corn Options(CBT)
Nov Oats Options(CBT)
Nov Rough Rice Options(CBT)
Nov Soybeans,Soymeal,Soyoil Options(CBT)
7:30 AM CDT - Adv Intl Trade In Goods(Sep)
7:30 AM CDT - Adv Retail Inventories(Sep)
7:30 AM CDT - Adv Wholesale Inventories(Sep)
3:00 PM CDT - Crop Progress
LT: Nov Copper Options(CMX)
Nov Gold & Silver Options(CMX)
Nov Natural Gas Options(NYM)
Nov RBOB & ULSD(NYM)
8:00 AM CDT - S&P Case-Shiller Home Price Index(Aug)
9:00 AM CDT - Consumer Confidence(Oct)
9:00 AM CDT - Pending Home Sales(Sep)
3:30 PM CDT - API Energy Stocks
LT: Oct Butter(CME)
Oct Gold & Silver(CMX)
Oct Platinum & Palladium(NYM)
Nov Natural Gas(NYM)
Oct Butter Options(CME)
Oct Milk Options(CME)
6:00 AM CDT - MBA Mortgage Index
7:15 AM CDT - ADP Employment Change(Oct)
9:30 AM CDT - EIA Petroleum Status Report
1:00 PM CDT - FOMC Rate Decision(Oct)
2:00 PM CDT - Dairy Products Sales
FN: Nov Natural Gas(NYM)
7:30 AM CDT - USDA Weekly Export Sales
7:30 AM CDT - Initial Claims-Weekly
7:30 AM CDT - Employment Cost Index(Q3)
7:30 AM CDT - Personal Income & Spending(Sep)
7:30 AM CDT - PCE & Core PCE Price Index(Sep)
8:45 AM CDT - Chicago PMI(Oct)
9:30 AM CDT - Natural Gas Report
3:30 PM CDT - Money Supply
FN: Nov Copper(CMX)
Nov Gold & Silver(CMX)
Nov Platinum & Palladium(NYM)
Nov Rough Rice(CBT)
LT: Oct Feeder Cattle(CME)
Oct Fed Funds(CME)
Oct Live Cattle(CME)
Nov RBOB & ULSD(NYM)
Oct Feeder Cattle Options(CME)
Oct Fed Funds Options(CME)
Nov Lumber Options(CME)
7:30 AM CDT - Ave Workweek & Hourly Earnings(Oct)
7:30 AM CDT - Nonfarm Payrolls(Oct)
7:30 AM CDT - Unemployment Rate(Oct)
9:00 AM CDT - ISM Manufacturing Index(Oct)
9:00 AM CDT - Construction Spending(Sep)
2:00 PM CDT - Cotton System
2:00 PM CDT - Grain Crushings
2:00 PM CDT - Fats & Oils
FN: Nov Orange Juice(ICE)
LT: Nov Live Cattle Options(CME)
Dec Cocoa Options(ICE)
Disclaimer: This calendar is compiled from
sources believed to be reliable. Moore Research Center, Inc.
assumes no responsibility for any errors or omissions. It is meant
as an alert to events that may affect trading strategies and is not
necessarily complete. The release dates for certain economic
reports may have been rescheduled.
* Please note that the information contained in this letter is intended for clients, prospective clients, and audiences who have a basic understanding, familiarity, and interest in the futures markets.
** The material contained in this letter is of opinion only and does not guarantee any profits. These are risky markets and only risk capital should be used. Past performances are not necessarily indicative of future results.
*** This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgment in trading!
RISK DISCLOSURE: Past results are not necessarily indicative of future results. The risk of loss in futures trading can be substantial, carefully consider the inherent risks of such an investment in light of your financial condition.