Natural Gas: A Super Glut? Don't Bet On It. Nothing Cures Low Prices Like Low Price

Commodities Roundup: Natural Gas - Supply Glut to Super Glut?


Selling calls should continue to be solid play for Investors
To paraphrase a line from an old Doors song, Natural gas prices have been "down so long that it looks like up." But as is the case with most every commodity, prices are where they are for one reason: Fundamentals.
The discoveries of the Marcellus shale in Pennsylvania and other finds in Texas and North Dakota late last decade were game changers in Natural gas - significantly altering the supply equation. 2012 finds the natural gas market dealing with a supply glut for which demand has yet to catch up. As we stated in The Complete Guide to Option Selling, fundamentals are the name of the game for selling options in commodities.
July Natural Gas Chart Here: Title "July 2012 Natural Gas"
But as we work through the first quarter of 2012, natural gas prices find themselves the beneficiary of a handful of factors that could potentially slow or halt the price slide. Have gas prices finally reached a value level and if so, is it time to sell puts underneath this market? I've searched high and low for a reason to be bullish, or at the very least, less bearish this market. I am here to tell you now - I couldn't find one. Investors reaping profits by selling call options in this market should have no trouble continuing to collect in the first half of 2012.

Gasoline Futures Decline as WTI Crude Rises

Gasoline Futures Decline as Brent Retreats, Consumer Prices Rise - Businessweek

Feb. 17 (Bloomberg) -- Gasoline fell for the first time in three days as Brent crude slipped and a rise in U.S. consumer prices boosted concern that demand for the fuel may decline. Futures retreated as Brent sank 0.4 percent in London, lowering the cost to produce fuel in Europe, a key source of U.S. imports. Prices also dropped as the consumer-price index increased 0.2 percent, the Labor Department reported today in Washington.

February 14, 2012 Current Commitments of Traders Charts

Current Commitments of Traders Charts

Based on CFTC weekly report.
(Weekly as of October 2000.)
15 Feb 11 - 14 Feb 12

Natural Gas Futures Up 3% On Drawdown

Gas Futures Rally 3% - WSJ.com

NEW YORK—Natural-gas futures were higher, on the heels of a 5.9% rally Thursday sparked by a bigger-than-expected drawdown in inventories. Traders said speculative investors were forced to aggressively cover short positions they had built up in anticipation of still lower prices. But futures rallied after the Energy Information Administration said withdrawals of gas from storage totaled 127 billion cubic feet in the week ended Feb. 10, more than the 119-billion cubic feet drawdown analysts had expected.

Cocoa dealers see origin hedging

SOFTS-Cocoa slips, dealers note origin hedging | Reuters


* Robusta premium narrows
* Cocoa hedging from Ghana noted
* Sugar trade focused on Brazil crop development 

NEW YORK/LONDON, Feb 17 (Reuters) - Cocoa futures slid on Friday, trimming gains following the short-covering rally earlier in the week, under pressure from origin hedging with both Ivory Coast and Ghana selling forward, said dealers.  Coffee inched higher in choppy trade, as dealers eyed the narrowing premium on front-month robustas, while sugar also turned up.  Liffe cocoa futures traded over 2 percent lower, with dealers noting hedging pressure.

5 Best & Worst Broker-Dealers

5 Best & Worst Broker-Dealers: Q4 Earnings

The larger broker-dealers and investment groups had a fairly mixed performance in the fourth quarter of 2011, despite the market’s comeback–including a 25% rise in the S&P 500–and the overall sector’s very strong Q4 earnings results.

Soros’ Bold Predictions For 2012

George Soros’ 8 Bold Predictions From the ‘Tiger Den’

The wealthy investors who make up the peer-to-peer learning group TIGER 21 like to invite heavy hitters, such as Mohammed El-Erian, Carl Icahn and Jim Rogers, to their Headliner Lunches. In December, George Soros joined that illustrious roster, according to a statement from the group released Wednesday.

Advisors Who Use Commodity ETFs Face 5 Regulatory Issues

5 Regulatory Red Flags for Advisors Who Use Commodity ETFs

For investment professionals who deal with commodity ETFs, “2012 promises to bring a host of new regulatory requirements and issues.” The statement, contained in a legal alert from the law firm Sutherland Asbill & Brennan, is hardly surprising, given the level of scrutiny for nearly every investing vehicle these days, but it’s sure to worry advisors everywhere that are registered with the Commodity Futures Trading Commission and those who use commodity ETFs for their clients. The firm has helpfully put together five areas of concern for “members of the commodity ETF industry” in 2012.

Will CME and LME hook up?

CME said to bid for London Metal Exchange - Commodities - Futures Magazine

Bloomberg is reporting that CME Group Inc. (CME) has made a bid for the London Metal Exchange as the world’s largest metals futures market plans a meeting next week to consider offers, according to a person with knowledge of the situation. The price CME Group offered wasn’t disclosed, said the person, who declined to be identified because negotiations are private. A purchase of the LME by Chicago-based CME Group would add to its metals that trade through the Comex, where futures based on gold, silver and copper are traded. LME’s board will review the bids in a Feb. 23 meeting. LME Chief Executive Officer Martin Abbott had set Feb. 15 as a deadline for takeover bids that will be reviewed by a special committee. NYSE Euronext (NYX) submitted an expression of interest in the LME, another person familiar with the matter said.

Iindicators Mixed - What We Know

Indexes, indicators mixed on market advance vs. 2011 highs - Financials - Futures Magazine

Market Overview – What We Know:

Major indexes posted modest gains Thursday.
S&P 500 rallied to new short-term high, but remains below 5-2-11 peak at 1370.58. Dow Industrials did not make ne short-term high, but remain above 5-2-11 high. NASDAQ made new high and remains above 5-2-11 high. Value Line index rallied to new short-term high, but holds nearly 80 points below 5-2-11 high.

Trading volume shrank by less than 2% in S&P 500 Thursday.

Short and Intermediate-term trends remain “Overbought” based on S&P price, but MAAD Daily Ratio has moved lower from “Overbought” to “Neutral” and possible zone of opportunity on short-term trend.

Weakness below lower edge of 10-Day Price Channel (1333.74—Friday) would suggest beginning of end of Minor Cycle trend in effect since December low (1202.37).

Short-term Momentum in S&P 500 remains marginally positive, but could easily turn negative.

Daily MAAD was positive Thursday by 19 to 1, but did not make a new short-term high with S&P 500. Indicator continues to hold below its February 8 short-term high.

Cumulative Volume (CV) in both S&P 500 and S&P Emini futures contract made new short-term highs Thursday, but CV in both remains well below 2011 highs.

Daily CPFL made new short-term high Thursday after breaking above late October resistance on Tuesday. Indicator remains substantially below 2-25-11 high.

Authorities Seize $6 Trillion of Fake Treasuries

Record $6 Trillion of Fake U.S. Bonds Seized - Bloomberg

Italian anti-mafia prosecutors said they seized a record $6 trillion of allegedly fake U.S. Treasury bonds, an amount that’s almost half of the U.S.’s public debt. The bonds were found hidden in makeshift compartments of three safety deposit boxes in Zurich, the prosecutors from the southern city of Potenza said in an e-mailed statement. The Italian authorities arrested eight people in connection with the probe, dubbed “Operation Vulcanica,” the prosecutors said.

Understanding the math behind options

Mark Sebastian Emphasizes Importance Of Understanding Math Behind Options - Forbes

(Kitco News) - The way Mark Sebastian sees it, pilots have to understand the concept of what makes an airplane lift off before they are allowed to fly. Likewise, traders should understand the mathematical concepts behind options before using them as a trading vehicle.

Could crude reach $120? Yes if last months highs are taken out!

Oil could reach $120 if last month’s highs taken out - Commodities - Futures Magazine

KEY TERMS
OVB Outside Vertical Bar
VRCB Volatility Reduced Compression Bar
STT 1 Trend Based on a Range Violation
STT 2 Trend Based on a Close Violation
RBB Resistance Bollinger Band
SBB Support Bollinger Band

ENERGIES

CLH12:

• STT 1 Trend is bullish. STT 2 Trend is bearish.
• New highs made today on current move @ 102.69. Upside Target over 115% achieved.
• March Crude was able to rebound from its earlier losses throughout the day as strong economic indicators propelled the market higher above the daily RBB and extending the move through the weekly objective of 102.44
• If WTI is able to continue its rally and break last month’s active contract high of 103.74, it will generate a monthly VRCB-OVB combo and set up a long term move back towards our Projected Target @ 120.35.
• Projected Daily Range: 1.78
• Projected Weekly Range: 4.73
• Projected Monthly Range: 10.15

NGJ12:

• STT 1 Trend is bullish. STT 2 Trend is bearish.
• Bullish KEY REVERSAL generated today.
• Nat Gas continued its schizophrenic trading patter today on larger than expected storage withdrawals as the market is reaching its seasonal lows
• Natural Gas may be able to rally to near $3.00 or slightly above but in doing so will only present a strong selling opportunity as extensive technical damage will be hard to overcome in the next few months out.
• Projected Daily Range: .124
• Projected Weekly Range: .430
• Projected Monthly Range: .760

No Yen For Japan's Currency

Investors Lose Their Yen For Japan's Currency - WSJ.com

NEW YORK (Dow Jones)--Investors are finally starting to turn against the yen in the options market. For the first time in nearly a decade, hedge funds and other traders appear to be buying more options that profit if the yen weakens against the dollar, as opposed to bets that pay off when the yen strengthens. To a growing number of investors, the yen is losing its appeal as a safe harbor from global economic turmoil. They say Japan's slump, and the increasingly drastic steps the country's central bank is taking to pull the economy out, are becoming too big a drag on the yen at a time when other economies are gathering steam.