Tuesday was a day for lower trading on natural gas futures, although, volume and volatility are staying below average during early trading sessions. This has been both a surprise and something to be concerned about for bullish traders, as it seems to be signaling issues when it comes to trading with the current weather forecasts.
The price action is also something to be worried about because it is indicating that bearish short-sellers may have fully-priced in the forecasts calling for back-to-back extremely cold weekends and the arctic blast that may linger into the first week in February.
Forecasts had called for 2 to 3 weeks of freezing temperatures, and if this is the situation, then prices would be substantially higher. But so far, the periodic break in the cold may be just enough to discourage the aggressive buying this market needs to drive it higher.
Even with high demand, production can seem to be strong enough to offset some if not most of the usage.
Going further, as December got burned by forecasts for the extreme cold which never panned out, buyers could seem to be a little reluctant to buy and will probably need some convincing; this could probably occur if the whole month of February being extremely cold.
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