Shocking Nat Gas Toll Swings Prompt 'Emergency Action' Past Times Cme

Two quick points on the post below.

1) Both ZH too Macro Tourist choose written close the natural gas/oil ratio too I frankly don't know what they are talking about. Except for both commodities beingness hydrocarbons too ofttimes times beingness constitute inwards the same land the 2 are non fungible. They don't brand a rational hedge, dingy or otherwise or fifty-fifty a couple merchandise much less an arbitrage. It seems similar to the folks who talked close a correlation betwixt solar stocks too oil. Huh? Unless you lot are burning stone oil to create electricity—and I don't intend anyone does anymore—there is no terminate user commutation final result too so no connector betwixt the 2 markets.
Both stone oil too gas tin hold upwards traded at the same store but at that spot is no argue to intend the positions are linked.

2) I explained why nosotros weren't proverb much close natty a few weeks ago:

We haven't been posting on U.S. of A. natural gas futures because, at to the lowest degree every bit far every bit blogging goes, it has been untradeable. It mightiness hold upwards doable if the spider web log was posted inwards machine-readable format too delivered via ultra-high-speed microwave relays amongst ultra depression latency. Maybe.

So instead we've been focusing on instant too 3rd derivative materials similar freight rates or transportation fellowship stocks when what the basis is craving is highly leveraged (accurate) directional bets.
Or something.

Look at this:

The amount of natural gas inwards storage is non solely lower than the 5-year average, it's been setting novel five-year, year-on-year, lows. You would intend the futures would hold upwards at to the lowest degree $5.00. Instead:

They can't seem to larn much higher upwards $3.25.

There is a lot of gas around, inwards the U.S., unconventional (shale) supplies choose gone from 5% to 40% of full production inwards simply over a decade, the end of the Australian mega-projects simply started delivering this calendar week too Russia's Yamal gas is ramping upwards fast but still....$3.25?...

Yesterday the Dec futures top-ticked at 4.929, closed to the 5.00 wild-ass guess.
Today's settle 3.901 -0.936.

From ZeroHedge:

Yesterday's furious brusk squeeze in natural gas has seen an equal too reverse sell off today, amongst Natgas instantly unchanged from earlier yesterday's sudden ramp that sent the front end contract higher past times 20% solely to encounter a 15% drib today.

In improver to pairing [sic?] of positions, Thursday’s spend upwards was probable exacerbated past times a study showing that producers had injected 39 billion cubic feet of gas into hush-hush storage end week, higher than consensus estimates, bringing full stocks to 3.247tn cu ft. Still, stocks remained at the lowest grade for this fourth dimension of yr since 2005, leaving the marketplace vulnerable to fears close a weather-induced shortfall.

While the catalyst behind the furious spike has yet to hold upwards confirmed, the severity of the cost activeness prompted analysts too traders to speculate if i or to a greater extent than hedge funds were liquidating positions during a frantic calendar week inwards global unloose energy markets that saw gains for gas every bit unsmooth stone oil prices took a dive.

As nosotros noted yesterday, the recent turmoil inwards the 2 commodities was probable due to a massive bearish positions inwards gas offset past times longs inwards unsmooth stone oil too "the unwinding of positions inwards i of these 2 commodities could potentially choose triggered the reverse final result on the other commodity," Citigroup said.

Indeed, every bit shown inwards the nautical chart below, the 2-week charge per unit of measurement of alter inwards natgas vs WTI was the highest going dorsum nearly fifteen years.

And every bit Bloomberg reported, for nat gas traders, Wednesday's cost rally was too so extreme that some were left comparison it to the turmoil that followed the notorious Amaranth blow-up 12 years ago. Gas futures rocketed upwards every bit much every bit twenty pct while  at that spot was an fifty-fifty bigger surge inwards the so-called widowmaker spread betwixt 2 longer-dated contracts -- inwards final result a play on how large stockpiles volition hold upwards at the terminate of winter. It’s the dramatic displace inwards the spread that’s leading observers to describe parallels amongst the 2006 implosion of hedge fund Amaranth Advisors, which lost $6.6 billion next wrong-way nat gas trades past times Brian Hunter. While too so far there’s no proposition of losses of that magnitude this fourth dimension around, the gyrations ready commodities markets abuzz.

Whatever the argue behind the merchandise unwind, the CME took what it called "emergency action" to widen price  fluctuation limits for viii nat gas futures contracts “in low-cal of recent natural gas cost movements."...

...MORE

Here's our link to the Macro Tourist on Wednesday:

Was H5N1 Large Energy Fund Just Crushed?

The end 2 weeks activeness From FinViz:

 
And if interested the end large natural gas fund self-immolation:

The human being who lost $6 billion (Brian Hunter, Amaranth)