The natural gas market has gone parabolic in recent trade launching into one of the steepest rallies seen in years.
An unexpected influx of natural gas demand for heating has spiked the market over the past six sessions which has continued in the overnight session.
Short position holders have been literally trapped as the market has gapped higher 3 out of the past 4 days. In order to exit, you must pay up and the price to exit becomes higher by the minute.
Weather forecasts continue to turn more bullish suggesting the later start to winter previously forecasted may be wrong. Instead, winter may be starting earlier this year boosting demand for natural gas.
Volatility over the past week may have traders thinking about last winter's rally which lifted spot prices to a 6.490 high in February. And the volatility looks like it may be here to stay.
What has been most surprising to me over the past few weeks was the aggressiveness of the sellers pressing the market to new price lows right before the high usage winter heating season. The resulting snapback over the past week must have been painful.
The winter rally is on. Get ready for another crazy ride similar to last winter.
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