Natural Gas futures (NG) saw gains exceeding 11% Monday morning as bearish investors lightened their short positions and new longs stepped in. This comes after NG saw a 25-year price low late last week.
Last Thursday, a bulky storage injection plunged prices to new lows, shaking out what was thought to be the last remaining bulls. However, Friday’s session was unexpectedly calm with no follow through to the downside and low volatility.
Abundant Supply vs Hot Weather
After hotter temperatures were forecast across the US over the next 7 to 10 days, investors shifted their focus away from the abundant supply and onto weather-related factors. As summer rolls on and temperatures continue to rise, a change in NG’s downtrend could be on the horizon.
However, a huge supply of natural gas is still a main driver of price, as well as impaired demand due to coronavirus-related shutdowns and limitations. Investors will be weighing in all of these factors when speculating energy commodities.
In the chart above, created 100% FREE using NinjaTrader, June 2020 price action for Natural Gas futures is shown on a daily timeframe. Today’s candle erases nearly a week of losses as investors shift their focus from oversupply to increasing demand.
As extreme heat rocks the nation, energy speculators will keep a close eye on Natural Gas and other commodities to identify trading opportunities.