US natural gas had a very volatile week, but its end was anti-climatic at best it lost 5% of its value during the last trading day of the week. However, the natural gas did gain a little more than what it lost during the Friday session.
So, for now, the price of natural gas is set at $6.60, while its weekly high was at $7.10. Similarly, the week's low for the US natural gas was around $6.25, which tells us it did gain a little value.
According to experts, the fundamentals are very clear, and the gas futures should be inching higher. But that's not what we are seeing, and the reason for this has to do with big hedge funds.
Available information suggests hedge fonts have some major short positions, and they are not just ready to let the natural gas run wild. As a result, these hedge funds are pushing the price down every time it reaches the $7 price.
It seems that there is a war going on between the hedge funds and the other market players. If we look at history, the party which always wins the war belongs to the fundamental side.
However, the US gas futures must rise above $7.20 price so that a major short-squeeze can happen. Only then would it lead to a sizable jump in the price of natural gas.
Recently, a report was also published by the U.S. Energy Information Administration which revealed that 50 billion cubic feet were used by local utilities.
If we look at the US climate, the current weather is warmer than what's normal during that time of the year. As a result, natural gas consumption will automatically be low. But when the temperature starts to drop, that's when the consumption of natural gas will pick pace.
Coming back to the technical side, there's a high chance that the hedge funds would have to close their short positions and cover their losses.