In some markets, investors should be wary of rollovers. One of such markets is NATGAS. The contract for natural gas will be rolled over today. Currently, the price is trading around 2.95 USD and the price of the next contract is around 3.30 USD, which means that the price will be moved several percent up! Obviously, the difference in this increase will be offset by an inverse swap score.
Where are the big differences between the series coming from? This is due to seasonality related to temperature. The end of October / the beginning of November is the beginning of the heating season and increasing gas demand. Therefore, the sellers are selling gas at a higher price, as there are more people willing to buy. It can be seen that in the later period, the futures curve slopes significantly downward, which is related to the end of the heating period and, at the same time, reduced demand for gas.
On the other hand, it's important to remember to adjust take profit and stop loss positions, which can be closed by the rollover.
Natural gas futures rollover will take place today. The price should be around 3.30 USD, which will be the highest level since January 2019. Source: xStation5
The curve for the next two contracts in particular is very steep. Source: Bloomberg
