Justin's Playground

https://oilprice.com/Energy/Natural-...tural-Gas.html

This Just Became The World's Largest Gas Hub

The increasingly global nature of natural gas, with the rise of liquefied natural gas (LNG) supply and trade, is making one of Europe’s key natural gas trading hubs into an even more important global benchmark for gas pricing and trading. The Dutch Title Transfer Facility (TTF) trading hub in the Netherlands has seen this year more open interest in gas contracts—the total number of outstanding positions held by market participants—than the open interest in the U.S. Henry Hub benchmark, data from exchange operators show.
Open interest in gas contracts on TTF exceeded for the first time open interest on the Henry Hub in 2020, as traders hold a record number of more than 1.6 million open positions across futures and options traded on the Dutch hub.
On the other hand, the number of open contracts on Henry Hub has declined from a 2018 record of over 1.6 million contracts to 1.2 million open positions now, according to data from exchange operators CME Group and Intercontinental Exchange (ICE) compiled by Bloomberg.
The TTF hub has been one of the most important trading hubs in the world, and the top in Europe for years. The boom in LNG supply in recent years and the growing imports of LNG into Europe have reinforced the leading role of the Dutch gas market in the global gas trade. Analysts expect TTF to continue gaining global prominence as a market on which customers will hedge their price risks.
Open interest across TTF futures and options was up by 73 percent year over year in December 2019, Intercontinental Exchange said, noting that “TTF is becoming increasingly internationalized and embedded across financial markets, cementing its status as a global benchmark for natural gas.”
The record continued into this year, with open interest in ICE TTF futures and options at a record 3.1 million contracts as of June 25, 2020, up by more than 70 percent on the year, due to the globalization of natural gas.
“The momentum behind the ICE TTF contract is driven by Europe’s unique role as the global balancing market for LNG which is cementing the contract’s utility as an important tool for customers to hedge their natural gas price risk. This trend is leading TTF to become increasingly internationalized, while the record growth in the use of JKM futures reflects its growing prominence as Asia’s natural gas benchmark,” Intercontinental Exchange said in July.
TTF has replaced the UK National Balance Point (NBP) as Europe’s main gas hub and benchmark price in terms of liquidity due to gas-on-gas indexation in northwest Europe, Gordon Bennett, Managing Director, Utility Markets at Intercontinental Exchange, wrote earlier this year. In 2019, TTF’s trading volumes surged by 42 percent year-on-year, likely driven by its role as the global balancing market for LNG, Bennett noted.
“Amid market upheaval — the liberalization of LNG, a shift towards gas-on-gas pricing, and the decoupling of oil and natural gas markets — TTF and JKM are emerging as robust and distinct global benchmarks,” he added.
The TTF hub has seen a “phenomenal rise in activity since 2014” and is now by far the most liquid, most traded hub, with the greatest number of participants of all the European traded gas hubs, Patrick Heather, Senior Research Fellow at the Oxford Institute for Energy Studies, wrote in a comment in May 2020.
Last year, total traded volumes at TTF were more than three times greater than its nearest rival, the NBP in the UK, and eleven times higher than the two German hubs combined, Heather’s analysis showed. TTF’s traded volumes now account for 79 percent of the total European traded gas market.
On Intercontinental Exchange’s Q3 earnings call last week, chairman and chief executive Jeffrey Craig Sprecher said:
“In our global natural gas markets, revenues were up 27% through the first nine months of 2020 led by the continued growth of LNG and, in particular, our European TTF natural gas benchmark which continues to emerge as the Brent of natural gas.”

/NG vs. /TTF

This is official. I am done with day trading. After 10 years of very hard working endeavour, finally I have concluded there's no way to consistently make money in this game. Even if I can make some money, it doesn't big enough to justify my time spending. I am getting old now and I hate spending 4-6 hours a day watching computer monitors. Life is short and this is absolutely waste of my time. I regret I didn't give up earlier or even I started this gambling. It's shame there are so many people waste their time in this gambling. Work hard and save money. Even working at McDonald's is 10 times better than trading. Now I only focus in spreading trading. This is the only method giving me consistent profit for nearly a year. Actually I haven't had any single loss in spread trading so far. Good luck.

I hate this picture (often seen in FF) the most. This is simply a joke. Giving up is wise sometimes. Lion King Richard gave up taking Jerusalem knowing he couldn't keep it from Muslims. Just like trading, giving up is stop loss before you blow your life.....

https://www.bloomberg.com/news/artic...r-model-tweaks

Bridgewater Loss Stuck at 18.6% in Main Fund After Model Tweaks

Ray Dalio’s Bridgewater Associates spent weeks earlier this year tweaking its investment models to account for unprecedented government stimulus and the worsening pandemic. That hasn’t helped performance.
The flagship Pure Alpha II fund has lost 18.6% through Thursday, according to a person familiar with the matter. That’s little changed from the decline it reported through the end of August.
This year’s loss in Dalio’s main fund is shaping up to be its worst ever, putting him far behind other macro managers who have posted strong gains in 2020.
The fund has gained little ground since the end of March, despite a strong market rebound. It was down about 23% in the first quarter as the spread of Covid-19 brought much of the global economy to a standstill.
After central banks flooded markets with liquidity, Bridgewater investment managers spent more than a month turning off strategies they deemed to be ill-suited for the new environment, and adjusted others they believed would work. By August, a person close to the firm said risk levels, which had been cut earlier in the year, were back to historic norms.
Client Withdrawals
Bridgewater, which managed $148 billion as of September, also had at least one more client pull money from its hedge funds. The Delaware Public Employees’ Retirement System recently liquidated its $180 million investment in the firm’s Pure Alpha Major Markets fund, Bloomberg Intelligence analyst Alison Williams said in a note this week, citing data from Pensions & Investments. In the first seven months of the year, clients withdrew a net $3.5 billion from Bridgewater hedge funds.
A Bridgewater spokeswoman declined to comment, and a representative for Delaware’s pension fund didn’t immediately reply to a message seeking comment.

https://www.bloomberg.com/news/artic...t-test-in-2020

Hedge Fund Managers Face ‘Survival of the Fittest’ Test in 2020

For years, hedge funds have blamed placid markets for their uninspiring returns. That excuse won’t fly this year.
Volatile markets in which stocks move less in lockstep should be a recipe for making money. But much of the industry is struggling, and clients are losing patience.
“This year separates the adults from the children,” said Tim Ng, chief investment officer of Clearbrook Global Advisors, which invests in hedge funds. “If you are a fundamentally driven, bottoms-up securities manager across any asset class, this should have been the year when you did well. Everything you’ve wanted for years exists.”
The $3.3 trillion industry gained 0.4% through October, according to the Bloomberg Hedge Fund Indices, trailing both stocks and bonds. Hedge Fund Research Inc.’s index looks worse, showing a drop of more than 4%. Big winners include Brevan Howard Asset Management and Coatue Management, and in the losing column are firms such as Bridgewater Associates, whose flagship fell 19% through Nov. 5. Some investors in struggling funds are asking: If they couldn’t make money before and still can’t now, why keep them?
An index measuring market volatility hit the highest in years
“It’s getting harder to have conviction in hedge funds,” said Adam Taback, chief investment officer of Wells Fargo Private Wealth Management, another allocator. “Many have not protected enough on the downside and others haven’t provided enough upside.”
Taback said he isn’t cutting funds from client portfolios, though the bar for getting recommended is higher. He believes more fund shutdowns are coming.
“It’s survival of the fittest -- a culling of the herd,” Ng said of the industry that counts more than 8,000 funds.
The $10 billion multifamily office Forbes Family Trust is analyzing funds’ three- and five-year returns to see whether they’re still a fit, said director Neil Datta.
“Why pay 2-and-20 when they can’t produce returns when markets are volatile?” he said of the industry’s longtime fee standard, roughly 2% for management plus 20% of profits.
Some investors are already parting ways.
The Delaware Public Employees’ Retirement System liquidated its $180 million holding in Bridgewater’s Pure Alpha Major Markets fund, Bloomberg Intelligence analyst Alison Williams said in a note last week, citing data from Pensions & Investments. Veritas Pension Insurance slashed its allocation to hedge funds by 45% after they failed to provide meaningful diversification.

More than a decade of easy monetary policy had suppressed stock dispersion, making it tough for funds to profit from price differences between strong and weak companies. It also helped create the longest-ever bull market, rendering it dangerous to bet against anyone.
But with shocks this year on various fronts -- social, political, economic and health -- markets became more unpredictable. When the Covid-19 pandemic struck, the so-called fear gauge, which tracks equity-market volatility, soared to levels unseen since the last financial crisis. Even as stocks rebounded from their March lows, managers dealt with frequent ebbs and spikes in asset prices.
There is still optimism for the hedge fund industry ahead, but it’s tempered.
“You should be moving back to a more security-selection-driven and less beta-driven environment,” said Taback, who expects the market tumult to persist. “It’s just hard because we all said the same thing last year and the year before that.”

https://www.bloomberg.com/news/artic...an-t-be-unseen

Ken Griffin’s Citadel Securities Fights to Block Rival From Using Leaked Algorithm

Citadel Securities told a London court that officials at British hedge fund GSA Capital LLP can’t unsee information taken from a secret algorithm that is at the center of a lawsuit.
The U.S. firm, founded by Ken Griffin, is seeking around $40 million over claims that GSA obtained a secret trading strategy from a senior trader at Citadel Securities while using texts and WhatsApp messages to hide all traces of the plan. In addition to the damages, Citadel Securities wants to block GSA from using the trading model.
The information “cannot be unseen or forgotten,” David Craig, a lawyer for Citadel Securities, said Tuesday in a court document. “GSA’s most senior managers now know where and how Citadel makes hundreds of millions of dollars in annual revenues. They cannot forget that information, or put it out of their minds.”
Citadel Securities claims in the lawsuit that GSA gained confidential information on a crucial automated trading model known as the ABC Strategy that cost the firm more than $100 million to develop. GSA insists there was no “secret sauce” in a high-level description of the structure of a trading algorithm.
The damages claim won’t be decided until a trial in 2022 with Citadel Securities asking for the final amount to be determined later. While discussing the potential size of the damages claim, Judge Thomas Linden noted: “How realistic that is, you may have different views.”
Spokespeople for Citadel Securities and GSA declined to comment outside the hearing.
The case, filed in December, lays out the steps that firms will take to protect automated strategies where companies deploy computing power to identify trades promising the biggest mismatches or largest payoffs with the least amount of risk. Only 15 out of Citadel Securities’ 3,000 employees had access to the “strategic logic” of the ABC Strategy, Craig said.
One of those who did was Vedat Cologlu, previously the head trader for the strategy in Europe and a quantitative researcher who was looking for a move after 11 years at Citadel. As part of the unsuccessful recruitment discussions, Cologlu provided GSA with a trading strategy plan that Citadel Securities argues was based on its own model, including the way the algorithm made predictions.
Citadel Securities Says GSA Stole Data While Recruiting Trader
GSA, in its own filing for Tuesday’s hearing, said that it has no plans to run a high-frequency strategy for trading stocks. It contends Cologlu wouldn’t even have provided the fund with a “blueprint” of the strategy because it would have destroyed his negotiating hand.
Cologlu didn’t respond to an email seeking comment. He said previously he denied any allegations that he misused Citadel Securities’ confidential information. Citadel Securities is separately suing its former employee at a private arbitration tribunal in London.
GSA said that the company’s head of recruitment thought so little of the documents provided by Cologlu that he used them to jot down personal notes, “including the measurement of a towel rail he was planning to fit at his house.”

Natural gas is on the verge of a long bull run, says an executive at Equinor

https://www.bloomberg.com/news/video...s-potter-video

So far so good today since NG is up but I would not leave a trade open overnight just because someone made a "prediction". I like "Natural gas is on the verge of a long bull run". When will the bull run start? How long will the bull run be? When I say "I'm in the verge of taking a long dinner", this is more accurate than the statement by the Equinor executive because I know when I will start to eat and for approximately how long

https://www.elitetrader.com/et/threa...334231/page-63

The problem with trading anything is that you need to first learn the ropes then try many strategies until you find one that fits your trading style. I learned trading stocks from my father then I traded stock options and warrants and believe me it was hard because the leverage is 2:1 in the US so unless a person is rich it's impossible to make a living but it can be good while investing in 401k for retirement. In 2005 a friend introduced me to forex and he was a good mentor. Without him I would probably have spent a long time learning the ropes. You are right that trading is not easy but Hilmy83 joined FF in 2006 so I can't understand why he wasn't able to find a good strategy and stick with it. Looking at his profile he started 166 threads so it looks like he spent more time posting on FF than trading. Not an ideal situation.

Please take a look at this video. It's obvious that with hard work, perseverance and dedication every trader can succeed.

Nymex Nat Gas futures Jan-Feb spread margin is only $300. Dirt cheap!
I love spread trading....


On the other hand, outright trading margin is $2900 and $2650 each.

Nat Gas is one of the most weather sensitive commodities. The problem is weather forecast is often highly inaccurate even under modern technologies.....

Heating demand faces more winter downside risk, Weather Service forecast shows
https://www.spglobal.com/platts/en/m...forecast-shows

Looks like Nymex has too high margins no matter what. I have 2 forex brokers I can use to trade NG. With the first one I have a margin of 1:100 and the contract specification is 2,500 mmBTU (1/4 contract). The second one I have a margin of 1:500 and the contract specification is 10,000 mmBTU (1 contract). The pictures shows the specifications of each broker and the leverage.

Personally, I don't like high leverage. That's for gamblers. (Spread trading is different. CME allows high leverage because it moves very slowly). In addition, it looks when I trade with CFD brokers, spread and slippage are usually higher. I used to trade Nat Gas with Dukascopy and I didn't like their high spread. IC Market is also the same. CFD is not bad for swing trading with small budget but not ideal for day trading or scalping I think.....

https://www.hellenicshippingnews.com...to-record-low/

U.S. natgas giving up on winter as widow maker spread cut to record low

Even though it’s only November, U.S. gas traders said warm weather this month has already caused some in the market to give up on this winter and focus on next year.
The premium of futures for March over April 2021 NGH21-J21 fell to a record low as it moves closer to possible contango, while the premium of November over October 2021 NGV21-X21 rose to its highest since April 2011.
Traders use the March-April and October-November spreads to bet on changes in winter weather.
“The March/April spread is threatening to switch from backwardation to contango before Thanksgiving! March is a winter contract. April is more of a shoulder month contract,” said Robert Yawger, director of energy futures at Mizuho in New York.
“March should never trade below April before winter even gets here,” Yawger said.
The gas industry calls the March-April spread the “widow maker” because rapid price moves resulting from changing weather forecasts have knocked some speculators betting on the contracts out of business, including the Amaranth hedge fund, which lost over $6 billion on gas futures in 2006.
The weather has been much warmer than normal with just 217 heating degree days (HDDs) so far in November versus a 30-year normal of 275 HDDs, and is expected to remain unseasonably warm through early December, according to data from Refinitiv.
HDDs, used to estimate demand to heat homes and business, measure the number of degrees a day’s average temperature is below 65 degrees Fahrenheit (18 degrees Celsius).
That warmth has prompted gas speculators to reduce their net long positions every week this month after those net longs reached a more than three-year high in late October.
In addition, warmer-than-normal winter weather this year combined with coronavirus demand destruction is expected to cut U.S. gas demand this year and next from 2019’s record high.
Source: Reuters (Reporting by Scott DiSavino Editing by Chizu Nomiyama)

https://www.reuters.com/article/us-u...-idUSKBN28333O

U.S. regulator issues report on negative oil prices

NEW YORK (Reuters) - A U.S. regulator on Monday issued a report detailing events that led up to U.S. crude futures’ historic collapse into negative territory in April, but did not delve into the actions by individuals or firms that may have profited on the day.
Benchmark U.S. crude futures plunged below zero for the first time in history in April as technical factors such as unusually high open interest coincided with fundamental factors including a shortage of storage options and an unprecedented collapse in demand due to the COVID-19 pandemic, the U.S. Commodity Futures Trading Commission (CFTC) said in the report.
Trading in the benchmark U.S. contract has ripple effects across the global market and is used a key reference rate for pricing physical and financial oil transactions.
Open interest in the May contract was much higher than usual in the weeks prior to expiration and specifically at the start of the April 20 trading session, according to the report.
The previous 12-month average open interest in expiring WTI contracts peaked around 430,000 contracts while open interest for the May contract peaked at 634,727 contracts on April 2.
Open interest also continued to increase until about 10 days prior to expiry of the May contract even though it generally begins to decline around four weeks prior to expiry, the report said.
Still, a root cause analysis evaluating individual price movements was beyond the scope of the report, the CFTC said, adding that further data, information, and analysis may affect the observations.
Officials also declined to comment on reports of a probe into trading activities that led to negative prices.
“While some may have hoped for a more definitive analysis, we simply cannot provide that at this time - just as we cannot confirm or deny media reports of investigations tied to these events,” said Chairman Heath Tarbert.

A typical manipulation I believe......... JPMorgan was also involved in a spoofing and FX rigging case before.

https://www.reuters.com/article/us-p...-idUSKBN2831N5

Exclusive: JPMorgan dominates gold market with record $1 billion precious metals revenue

LONDON (Reuters) - JPMorgan has earned record revenue of around $1 billion so far this year from trading, storing and financing precious metals, vastly outperforming rival banks, two sources familiar with the matter told Reuters.
FILE PHOTO: An employee holds gold bars before the refining process at AGR (African Gold Refinery) in Entebbe, Uganda, October 4, 2018. REUTERS/Baz Ratner/File Photo
The coronavirus has created a bonanza for investment banks dealing in gold, silver and other precious metals by triggering massive investor purchases and rupturing the normal workings of the market.
But JPMorgan has dominated, growing its share of the market.
The U.S. bank’s revenue by mid-November accounts for at least half of the $1.7 billion to $2 billion that consultancy McKinsey CIB Insights estimates the top 10 investment banks combined will make this year from precious metals, mostly gold.
Its commodities division is on track to bring in more than $1.5 billion this year and could challenge Goldman Sachs for the title of top earner, the sources said.
JPMorgan and Goldman Sachs declined to comment.
Individual investment banks have rarely made more than $1 billion in commodities in recent years, and none has ever before earned more than around $600 million in precious metals in a single year, said George Kuznetsov at McKinsey CIB Insights.

Reuters Graphic
JPMorgan is the largest bank in the United States and one of the biggest in the world.
It sits at the heart of the global bullion market, and its activities span trading physical bars to derivatives, running vaults and clearing trades in London, the biggest trade hub.
REVENUE WINDFALL
Driving profit has been the clamour for gold and silver from investors, mainly in Europe and North America, worried the coronavirus pandemic and money-printing by central banks could devalue other assets.
These investors pushed gold prices to record highs above $2,000 an ounce earlier this year.
Added to that are profits earned on the Comex futures exchange in New York, where supply issues earlier this year made it more lucrative for those with access to physical gold to trade precious metals.
Banks such as JPMorgan took advantage of opportunities on Comex and helped clients do the same.
JPMorgan’s client business dwarfs that of others.
Data from CME Group, which runs Comex, show JPMorgan’s clients accounted for one-third of all trade in gold bars registered with the exchange in October, and more than two fifths in June.
Like other big banks, JPMorgan was able to get and ship metal cheaply and in large quantities when other, smaller traders could not, sources said.
The revenue windfall will likely fade as trading on Comex reverts to normal patterns, but high gold prices and interest from investors mean this business will remain profitable.
“2020 is going to be an outlier year,” said Kuznetsov at McKinsey.

It's quite likely that JP Morgan selling gold is the reason for the big drop in the last few days.