The December 14 at one point was down over 6% in today's trade gapping lower on Sunday night's open.
The reason for the weakness was simple, the weather forecasts changed. Last week's below-normal forecasts completely changed this week as above-normal temperatures are now expected across much of the U.S. in the latest National Weather Service 6-10 and 8-14 day forecasts.
The one positive note for the bulls today was that the December contract closed down only .115 settling nearly .150 above the early morning low.
Weakness in the market should be bought as there is plenty of winter ahead for a potential spike in heating demand. The winter 13-14 rally didn't really pick up steam until early-January so weakness on moderating temperatures should be expected.
The funds have been noticeably absent from the market only lightly adding to long positions over the past two weeks. The current speculative long position in the market was estimated at 147,520 contracts, up 1,936 according to the Commitment of Trader's Report released on Friday. This is well below the record high long position of 488,901 contracts reached last February.
A price drop under 4.000 two weeks ago quickly reversed back higher. Similarly in today's trade, the market bottomed out just above the 4.000 level as traders buy into market weakness between 3.900-4.000.
The biggest risk in the market at this point lies to the upside. Weakness may continue ahead of the holiday week but new prices lows during November regardless of bearish weather forecasts remains unlikely.
Technically, the market stall last week for a second time at 4.450-4.550 weekly high resistance. A breakout above this level which is expected sometime this winter would turn 4.980-5.000 into the next upside objective.
As stated many times before, recent volatility is likely the beginning of a turbulent rally winter ahead.
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