Adding Confidence to Your Trading Decisions

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Last update: May 8, 2020, 15:40 EDT
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Description

US Commodity Futures Trading Commission (CFTC) publishes a weekly Commitments of Traders (COT) report that provides a breakdown of open interest for natural gas market in which 20 or more traders hold positions equal to or above the reporting levels established by the CFTC (200 contracts for natural gas). These charts calculate the aggregate number of contracts held by different categories of traders (in NYMEX natural gas futures and ICE natural gas futures), display their net position (Chart 1) and show their historical rank (Chart 2 and Chart 3). To learn more about CFTC COT Reports click > HERE.

Historical data are available from January 12, 2010.

The charts are interactive. You can click on any series in the legend to hide/show the data. You can also click on the chart and drag out a specific area you wish to zoom. Alternatively, use calendar filter to select a specific data range. Also, to print or download the chart, click on the "menu" button in the top right corner of the chart.

Updated every Friday

Source: US Commodity Futures Trading Commission, Bluegold Research calculations

Traders' Note

If large speculators (managed money) are net long or are increasing their long positions then there is a bullish bias, if they are net short or are increasing their short positions then there is a bearish bias. However, it is important to remember that any side of the trade can become "overcrowded". When net positions are near record highs or lows, it may be safer to be on the opposite side of the trade. To understand how the current net positions rank historically, you need to look at the Indices (Chart 2 and Chart 3).

  • 1-year Index shows a percentile of net speculative positioning in NYMEX + ICE natural gas futures measured over the past year (52 weeks). This indicator converts net positions (commitments) to a 0% - 100% scale. It reflects where the current net position ranks as a percentage of its range over the last 52 weeks.
  • 3-year Index shows a percentile of net speculative positioning in NYMEX + ICE natural gas futures measured over the past three years (156 weeks). This indicator converts net positions (commitments) to a 0% - 100% scale. It reflects where the current net position ranks as a percentage of its range over the last 156 weeks.

Use this indicator to watch for extremes reading in the natural gas market. Readings of 95 and higher as well as 5 and lower indicate a potential market extreme. Therefore, traders would normally look for opportunities to go long when non-commercial and/or managed money index is close to zero. Likewise, traders are advised to look for opportunities to go short when non-commercial and/or managed money index is close to 100. 1-Year index is more volatile than a 3-Year Index and therefore generates more frequent, but weaker signals. 3-Year index is less volatile than a 1-Year Index and therefore generates less frequent, but stronger signals.

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