As most of you know, I have discussed over the years, the seasonal tendencies in natural gas, with the Q1 of the fiscal year showing weakness; Q2 bringing strength in prices; Q3 typically weak for prices; and the Q4 is met with support and stronger prices. Last year had some abnormal aspects to this historical pattern. The Q1 low came on time at the end of March; the Q2 high came in May after only a 13 day run; the q3 lows came at the end of June trade on the July expiration; and the Q4 high came in early November, a common theme. The Q1 low for 2021 seems to be December 28th low at $2.23 unless the coming six days bring a test. After last week’s failure to expand the lows significantly– not sure there is enough action to test and break the Dec low.
That being said, there seems to be great interest in moving prices lower as the Chart below shows. It seems that the Managed Money Shorts have recently blown out their position in the last couple of weeks. Since the middle of February the short position has nearly doubled and now stand at nearly 200,000 contracts. Looking at the price movement– it seems the sector sells the contract at the beginning of the week (the CFTC data is dated on the Tuesday of each week) as that is when the significant declines have occurred in the last couple of weeks.
