The Henry Hub Natural Gas contract rolled over into the December front month with a bang early on Wednesday.
Natural Gas
The natural gas market has rolled over in the futures contract to the December month, and we’ve seen a massive gap higher. Quite frankly, that’s not a huge surprise. You see that a lot on the rollover anyway.
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For example, there are some contracts that have been rolled over from May to June. You saw the market jump higher. You saw the jump higher here in September to October in anticipation of what that next month might be like.
NOAA report
NOAA currently predicts that the temperatures in the United States between now and around the 6th of November are warmer than usual for many of the higher heating-demand areas, think New York, Cleveland, Pittsburgh, places like that. That being the case, it has put a lot of downward pressure on natural gas, which you had seen massive selling over the last week or so.
Now, though, as we roll into natural gas, traders are starting to play the averages of what might be in 6 weeks. I suspect at this point, and this is historically often the case, you’ll get a big gap like this that we got at the beginning of the session, and then you’ll get a pullback.
Right now, the market’s very quiet. We’re still in the process of people rolling over, so not a lot to see here other than this could give you an opportunity. Do not be surprised if you see a couple of wicked red candles over the next couple of days. I’m actually looking forward to that because it means I can buy natural gas on the cheap.
The month of December typically is colder, although you’ll have to watch those weather forecasts. Export demand really isn’t a thing at the moment, although it very well could be in Europe. If anybody’s looked at those prices of natural gas in Rotterdam, wow is all I can say.
So, with that being the case, I’m looking to buy the dip. I just need to see the dip. The rollover into the December contract might set up for a nice winter squeeze-type of play.
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