Monday, April 21, 2008
Record High Natural Gas Short Positions
According to the April Committment of Traders report, June Natural Gas contracts have a record number of short positions open, greater than 182,000 (non-commercial) open short positions to be exact (closer to 182,000). Just for comparison there are roughly 130,000 open long positions in crude oil in this same report. Energy across the board is on its way up, and if these traders get caught in a short squeeze, that could be quite a rally to the upside. Food for thought. I wish I had a link for you here, but for some reason I'm having trouble uploading the table or the link to this information, I'll have to try again later.
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3 comments:
I've been following Natural Gas on a daily basis, I closed a long position mid march and I've been waiting for another pullback to get back in. I'm also following the movements of Cattle, Hogs and I bought Cotton today. Any thoughts on those, and what does it mean when there's a large short position on a commodity?
First, thanks for reading. Second, I'm afraid I don't follow much of the livestock these days, so I won't offer any opinion there as I would do significantly more harm than good, trust me!
On the short interest side, it could mean any number of things. Here are a few points: 1) One possible energy play that traders perform is to go long either crude or nat gas and then short the other under the premise that these two are historically inversely related (not factually based, but a present opinion all the same). 2) There may actually be a sound fundamental reason to be short that I am unaware of and that many smarter people are, this may be true and can and has gotten me crucified before. 3) They're wrong. I love this, because when it starts to tick upwards, they have to cover their shorts and when there aren't buyers out there at low prices because everyone is short, the price goes up and up and up. The more shorts, the harder the squeeze up. That's my present opinion of nat gas. I think with crude touching $120 that nat gas has room to run as a "cheap fuel."
I'm looking at cotton myself right now, I'll get back to you on that, still reading tonight...
Thanks for that, I've read gold and silver are shorted to hell the higher they go, which seems bizarre but I guess they have very deep pockets. I also read somewhere that NG would be used more and more, obviously because of the high cost of oil, not just in heating but also transportation!
The Canadian government announced that it would pay pork producers as much as $50 million to kill 150,000 pigs by fall.
http://www.npr.org/templates/story/story.php?storyId=89713037&ft=1&f=1004
Apparently cattle demand is looking healthy too.
I don't know about rice although I think I've missed that particular boat.
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