1. Spread.
I see more and more of this. The front month gets sold off quicker and bought slower than the next month. Last month, the spread between Aug and Sept started about 0.3 and by the time the Sep expired, the spread became 0.4. If I rolled over in early Aug, I would have saved $1000 per contract compared to the last week of Aug (Sept NG futures expiration).
Just today, I watch the spread between Oct and Nov NG contracts. Currently, Oct NG is +0.010, but the Nov is +0.072. The Oct is lagging by 0.072 or $720 per contract.
The solution I found was to roll-over either early or do not trade the front moth contract. Of course, if the markets take off, usually it starts from the front month, but it gets sold off a lot quicker as well.
2. # of rigs
I also keep an eye on the # of Nat gas rigs. You would think if NG price goes down, they should slash the number of rigs, but interestingly the # of rigs keep going up. No wonder NG price keeps going down. While we're at multi-year history in NG storage, they keep producing more and more!
Unless.... since the price of Dec contract is close to 5, there's no reason to sell now, so just produce and store until December. Or it could be that things are getting better, so they keep producing more. I don't why honestly. All I know is NG price keeps going down. As a matter of fact, we went down almost $2 in the last month or so with so many days of consecutive losses, which I've never seen any markets especially in futures.
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