Traders Continue To Get Long Natural Gas

This is an update on the natural gas chart I've been talking about in several Thrasher Analytics’ letters. I initially began discussing Natural Gas COT positioning when Large Traders went short. Historically, the price of nat gas has tracked with whether Large Traders were buying or selling in the futures market. When they’ve gone from being short to long, natural gas often has a bullish response. That’s now begun to take place and they’ve been adding to that net position in recent weeks.

Large Traders have increased their net position and are now up to 266,000 contracts. Nat gas has been moving higher off that swing level around $2 and is closing in on $3. As shown by the blue arrows on the chart, in the past when Large Traders went net-short and then moved back to being long, when they got to this level of a position, 266k contracts, it had been pretty close if not right at the low in in natural gas.

We are now in hurricane season with reports of above-average sea temperatures. This could create a catalyst for a move higher in both oil and gas prices should a hurricane disrupt production and transport in the Gulf of Mexico or the Eastern Coast.

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Disclaimer: Do not construe anything written in this post or this Substack in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned.