Commodity Trading

[theflasherman]

Hi all

 

I thought I would stop clogging up the other specific commidity boards with my learning of trading commodities, so I opened up this topic to see how we go.

 

I've been trading gasoline and natural gas today to some minor success. I'm quite bullish on both and saw the early selloff as a bit of a knee jerk reaction given very favourable fundamental trends. I also think many refineries will be offline for a while due to power outages despite not suffering any damage.

 

Once people start heading home after the hurrican expect demand for gasoline to soar IMO.

 

Crude prices are very resiliant at the moment having erased earlier losses. Heating Oil is the surprise of the day but I sense a that nag gas could recover earlier losses following heating oil's lead.

 

Currently long natural gas and gasoline.

[theflasherman]

What a day!

 

Closed out of gasoline way too earlier but took a nice profit.

 

Have been very long natural gas over the last couple of days and it appears to be paying off. Pipelines are damaged everywhere with Force Majeure being declared. There is much uncertainty about the damage which is feeding the price.

 

More natural gas is offline now than yesterday. I figure that is a result of more damage being found and having to be shut down for repairs. More natural gas production has been lost in the last five weeks than from five months after hurrican Ivan. I see very little downside risk over the next few months with winter coming on.

 

Am now looking at the storage report tomorrow to see if builds have occured.

 

At some point I'm looking to go short gasoline, but just need to pick my time. The time is not yet as 15% of refining capacitiy is expected to be offline for weeks but I believe the easy money has been made there so not worth going long.

[kosmo]

In reply to: theflasherman on Thursday 29/09/05 08:27am

hey Flash,

 

well done! What platform are you using to trade these?

 

cheers

[theflasherman]

In reply to: kosmo on Wednesday 28/09/05 10:33pm

Hi Kosmo

 

I'm using spreadbets via IG Index (www.igindex.co.uk but you would use www.igindex.com.au).

 

I've also forked out US$210 a month for Nymex and Comex data via www.nymex.com to have live prices and live Dow Jones energy news. Sounds a lot, but it pays for itself VERY quickly if successful.

 

I find that having live data matched up with the spreadbetting platform provides the best way to time spreadbets. The beauty of a spreadbet is that it is tax free! Also, you can bet on a huge range of shares, commodities, indicies, FX, treasury bonds and even sport. The downside is that you can lose a lot very quickly!

 

Let me know if you want more info and I can give you it!

 

[kosmo]

In reply to: theflasherman on Thursday 29/09/05 09:12am

Thanks Flash,

 

I'll check out what you've provided. My problem at the moment (besides funds) is time. But I can't help myself, I need to know what's cooking. http://www.sharescene.com/html/emoticons/tongue.gif

 

Interesting tho, on the ABC news finacial report despite Australia's reasonably strong market we're not one of the top performing this year. I can't remember the figures (they wouldn't be hard to find). But I guess familiarity is often the advantage.

 

cheers

[theflasherman]

QUOTE (kosmo @ Wednesday 28/09/05 11:33pm)

Hi Kosmo

 

There is something to be said for sticking to one's knitting http://www.sharescene.com/html/emoticons/king.gif

 

I don't know if I'll continue to trade commodities directly much but I saw an opportunity on this occasion and went for it. I'll maintain a trailing stop loss to see how far my position runs. US$20.00 per mmcf (see below) would be VERY nice!

 

QUOTE

DJ WSJ(9/29) Commodities Report: Natural-Gas Futures Rise Wed ÃÆâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚   (From THE WALL STREET JOURNAL) ÃÆâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚   By Maya Jackson Randall and Spencer Jakab ÃÆâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚   Dow Jones Newswires ÃÆâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚  In an early taste of what consumers can expect by way of higher heating bills this winter, natural-gas futures skyrocketed 10% to almost $14 per million British thermal units, its highest closing on record. ÃÆâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚  The move added weight to a warning from the Natural Gas Supply Association alerting consumers that colder weather in the East combined with hurricane-related supply disruptions along the Gulf Coast will likely mean higher natural-gas prices across the country this winter. "Consumers should be prepared to pay higher bills this winter," said association Chairman Joseph Blount. ÃÆâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚  Natural-gas futures on the New York Mercantile Exchange for delivery in October soared $1.251 to $13.907 per million BTUs. The expiration of the October contract at the same time that the delivery point for Nymex futures, Louisiana's Henry Hub, has been closed for a week, sowed uncertainty in the market and added to yesterday's volatility. ÃÆâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚  Traders are openly talking about price spikes as high as $20, according to Guy Gleichmann, president of futures broker United Strategic Investors Group. ÃÆâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚  The natural-gas association, which represents producers and marketers, said in its annual winter outlook that Hurricane Katrina-related production losses, an anticipated increase in heating demand, and the potential effect from Hurricane Rita "will result in upward pressure on the natural-gas market, compared with the average for last heating season." The weather "is the largest single factor affecting natural-gas demand and customer bills," the association said. The group highlighted supply constraints in the market and urged customers to conserve this winter by turning thermostats down a couple of degrees and weatherizing their homes. ÃÆâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚  Supply remains a significant concern in the wake of two hurricanes that have "shut in," or closed down, production that can't be readily replaced with imports. Hurricanes Katrina and Rita have delayed or halted production of about 180 billion cubic feet, or 4.9% of the yearly gas production in the Gulf of Mexico. ÃÆâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚  In other commodity markets: ÃÆâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚  GOLD: Prices on the Comex division of the Nymex rallied sharply, with options-related activity and strength in energy futures lifting trade. Central-bank selling of gold reserves was less than anticipated, lending support. September gold rose $7.10 an ounce to $469.70, while most-active December gained $6.90 to $473.10. ÃÆâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚  COFFEE: Futures on the New York Board of Trade rose 5% on technical-chart and commodity-fund buying. September coffee rose 4.75 cent a pound to 93.40 cents. Most-active December also rallied 4.75 cents a pound to 92.90 cents. ÃÆâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚  (END) Dow Jones Newswires ÃÆâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚  09-28-05 1930ET Copyright ÃÆâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚© 2005 Dow Jones & Company, Inc. DJ info: 1044 N/DJCS,N/DJME,N/DJOS,N/OSCM,N/OSEN,N/OSFF,N/OSME,N/OSTR,N/CMD,N/CMM,N/DJSS,N/DJ I,N/GPC,N/JNL,N/LNG,N/MET,N/PCS,N/WLS FSN32183 CEIMNT COMMENTS ENERGY GENERAL METALS 2005-09-28 23:30:12 UTC ^^^^^^

[wolverine]

QUOTE

I've also forked out US$210 a month for Nymex and Comex data

 

i am too much of a cheapskate.

 

good work by you flash.

[theflasherman]

In reply to: wolverine on Thursday 29/09/05 02:37am

Hi Wolve

 

Let's just say the cost has been VERY worthwhile.

 

I'm still letting those natural gas positions run. Pipelines are screwed, up to 40 platforms missing in the GOM. More production lost in last 5 weeks than lost in the 5 months surrounding hurricane Ivan. I can't imagine a more bullish scenario. Refineries are also screwed meaning less heating oil will be around as a substitute. The only negative is that these high prices are going to see a reduction in demand, particularly in the industrial end. I just need to choose the level to jump off, although my trailing stops may decide for me.

 

 

 

 

[theflasherman]

99% of oil and 80% of gas still shut in in GOM.

 

Still very positive. Staying long natural gas. Immediate market reaction is a slow drift down but not as violent reaction to the earlier neutral to bullish inventory report.

[theflasherman]

nervous times on the natural gas market. Many nervous about taking positions at these heady heights. I took the opportunity to increase length further.

 

I notice that there are net shorts in the market so hopefully a nice bout of short covering will push it higher.

 

I think the key piece of information today will be the MMS report. If it still shows a largely unchanged position from Friday it could push the market higher. For what it is worth, I think it will be largely unchanged due to pipeline issues.