Why Natural Gas is up 20% over the last two weeks

In this edition of BullfinderAI Insights, we take a look at the latest developments in the Natural Gas Market.

Since our last Natural Gas update on November 6th, Natural Gas futures are up approximately +20% to $3.22

Let’s have a look at why…

Colder than Forecasted Winter coming for the US…

The force of La Niña is tipped to again have a detrimental affect on the coming winter’s weather and temperatures for the 4th time in 5 years, naturally cooling ocean water across the tropical east Pacific Ocean.

This seasons La Niña is expected to result in changes to temperatures, rainfall, wind and weather patterns…but what is La Niña?

La Niña is a periodic natural phenomenon that influences weather patterns, the result of which frequently influences market prices of commodities from Natural gas all the way to Almonds.

Anything, including weather, that affects supply and demand of any input, will play a role in changing prices - In this case, cooler weathers ahead are increasing the demand for Natural gas (heating) in the US.

Trump Administration favorable of Natural Gas…

President Trump is supportive of Natural Gas and believes it will be one of the key commodities set to fuel future growth of the United States.

As the demand for electricity continues to mount with the rise of AI, electric cars, driverless car frameworks and the likes, Trump believes Natural Gas is one of the cleaner options available to foster robust electricity production and far surpass current levels of energy production in the US.

As a result, some Investors and Fund Managers predict that Natural Gas utilization rates may receive a significant upgrade during Trump’s term as President, and hence may be bullish on the price of the commodity and positioning their portfolios for exposure to potential upside.

Purchase Spree by Funds with Short Positions…

Investors and Funds with ‘net short’ bets on Natural gas may have been liquidating their positions over the past few weeks, as recent developments in Government and weather forecasts may have well and truly changed the economic landscape and future demand for Natural Gas.

What does ‘net short’ mean?
Fund managers, Investors and Traders look to take advantage of falling markets by selling the price of the asset ‘short’ - Making money if the market falls, but losing money if the market rises against them.

If you enter into a ‘short’ position…you have to eventually hit ‘buy’ to get out and close your position.

If you are in a ‘short’ position, and want to change it to a ‘long’ position, you’d have to buy the instrument twice - Once to close the short, and once more to attain a net long position. This may be a contributing factor to the recent increase in the price of Natural Gas.

How do I get exposure to the price of Natural Gas?

There are many ways to get access to the price of Natural Gas…

But our favorite is via a Natural Gas ETF.

Many of these ETF’s are available, either via local or international markets - Below you’ll find a few examples of Natural Gas ETF’s…

Global X’s Natural Gas ETF - HUN…

First Trust’s Natural Gas ETF - FCG…

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