It was up 23 cents from yesterday's close. I really can't see this rally having much more steam. I've read that the rise is due to a combination of short sellers getting out and people being more optimistic about the economy (an improving economy will boost demand in NG). That's all fine and dandy, but the reality is:
- Natural gas inventories are going to reach record highs - they'll increase until mid-October.
- Weather/Temperature has been very favorable.
- There have been no hurricanes.
- There has been no sign of increase in demand yet.
So yes, sure, NG demand will pickup at some point, but for the next month there is no justification for the spot price to keep going up. I'm still reading analysts predictions of NG falling below $3 in October, mainly citing the inventory levels and favorable weather (meaning no big increase in demand).
Current spot price is either 3.44 or 3.59. The site that shows 3.44 showed yesterday's close at 3.37. That would mean it only increased 7 cents today, while the futures all increased about 25 cents, which seems strange, so I'm wondering if the 3.59 number is more accurate. I don't know what its previous day's number was though. I still have to find a site with spot prices I can trust. Either way, I have anywhere from a $1.16 to $1.31 buffer, with 34 days left till expiry. I feel very safe in this trade. In 4 trading days the Nov contract will become the near-month contract, as the Oct one expires on Sep.28th. It will be interesting to see the behaviour of the Nov contract when that happens.
The weekly inventory numbers will be released tomorrow morning. As long as the inventory increase isn't way lower than expected, I think NG will drop quite a bit in the coming days. But who knows, because right now the rally is against me.
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