Natural gas. Story of the year? We've been saying that for weeks. Now this today from oilprice.
A Tampa, Florida-based options trading firm, OptionSellers, went dark this weekend after it informed its clients of a “catastrophic loss event,” resulting from a short squeeze on the natural gas market, ZeroHedge reports.
According to the letter, the short squeeze took place at a rate “truly beyond anything I [president James Cordier] have seen in my career. It overran our risk control systems and left us at the mercy of the market.”
The market obviously had no mercy for traders shorting natural gas; last week, on Wednesday, natural gas shot up 18 percent to the highest since 2014, on the back of forecasts about cold weather that drove traders into a frenzy as they bought more gas to cover their short positions, probably opened on reports of ample supply in the United States.
Cold weather this time of the year is hardly a surprising piece of information, but it somehow managed to surprise traders betting on a price fall in natural gas. Since the start of the month, according to CNBC, natural gas has gained as much as 48 percent, and according to CME Group, trade in the commodity on Wednesday hit an all-time high of 1.2 million contracts.
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