Prompt gas spiked to the highest price since February ’14 then fell 10.7% in less than three trading days. Some would consider that price action a reversal. For four straight weeks, prompt gas and the winter strip closed higher prompt gas and the coming winter strip closed higher even after the declines. For the first time since ’00 there was no definable price decline during the period bracketing Labor Day which, historically is one of the most consistent price negative periods all year.
Key elements of the declines / reversal was the declines in open interest (liquidation of over 30,000 contracts) with the highest weekly volume since last January. The highest volume day of the week was the reversal day (Wednesday) with over 778,000 contracts traded. That type of volume and reduction of open interest suggests that a correction was in process which was confirmed with trade later in the week.
