According to the September 28, 2010 Commitment of Trader’s report from the Commodity Futures Trading Commission, large speculators and hedge funds slashed their long position by approximately 25 %. The passing of hurricane season without any impact on the gulf region, weak demand, and moderating weather have contributed to natural gas’ continued slide.

Natural gas prices have dropped over 30% since the beginning of the year, and it feels like we are in a holding pattern.  Seems the market is range bound around $4 per MMBTU, and will trade sideways to lower due to the economic uncertainty in the US, and the lack of solid fundamentals to support a turn. The next significant event that may trigger a re-calibration of market sentiment will be the elections in November.

Of course they are already predicting “warmer than normal” temperatures this winter, but I put very little weight in such forecasts as these same forecasters said we were going to have an above average number of named tropical storms this summer. We have seen how that forecast played out.

As I write this post, the prompt contract NOV 10 is down around 10 cents to $3.69 per MMBTU.