Natural Gas Plummets On Inventory Data

December 22, 2005
Ashton Dorkins

Futures traders be sure to come back this
weekend to read the Big Saturday Interview as I had the pleasure of speaking
with Floyd Upperman. Floyd is at the forefront of futures trading after
developing his own method of interpreting COT data. Floyd not only shared his COT knowledge but also talked about which futures markets are currently offering the
best trading opportunities and what he’s looking ahead to in 2006.

In today’s economic news, Personal Income and Spending rose in
November

(report).
Jobless Claims fell more than expected

(report)
and Leading Indicators showed improvement in November.

Treasuries closed higher, led by the short-end
and further flattening the yield curve. The spread between 10yr T-notes and 2-yr
T-notes (which inverted briefly intraday this week) is now the smallest it has
been since January 2001.

The US Dollar moved in the opposite direction
versus the Euro and Yen.

For a review of the Dollar in 2005 and a look ahead to 2006, read

Jes Black’s column from
earlier this week.

Among the energies, only Unleaded Gasoline was
able to close higher. Natural Gas led the decline, recording its largest fall in
more than 2-years after today’s drop in inventories was much smaller than
forecast, in part due to warm weather.

Chart courtesy of FutureSource.com

Chart courtesy of FutureSource.com

Sugar hit another new contract high. Sugar prices have been supported by a
number of fundamental reasons this year, from strong Ethanol demand, production
deficits and more recently the EU decision to cut subsidies.