A contrarian trade for natural gas

Recently, the National Oceanic and Atmospheric Administration was predicting a mild winter this year due to El Nino. This has led to a decline of the natural gas (NG) price as a warm winter would mean less demand for natural gas. A few days ago, the U.S. Energy Information Administration (EIA) was forecasting that household natural gas heating bills will fall by 10% this winter. This has really crashed NG and its price dropped like stone, briefly below $2. It has reached a historical low at the moment. This may set up a great contrarian trade with a few things to consider:

• The sentiment is extremely low as virtually no one is interested in NG at the moment. As I said before, when everyone is standing on one side of the boat, it will soon tip over.
• The current historical price has likely factored in the low demand of NG during this winter. However, we all know that how accurate the weather forecast is, especially for something in a few months. I have seen a different forecast from the meteorologists at WeatherBELL , which is a premium service based on their models that a major cold and snowy winter over the South and into the East will occur in the coming months. If this turns out to be true, it may surprise everyone and the mood for NG can turn around overnight.
• We all know in the past decade, US has produced too much NG due to the revolutionary fracking technique. So we have a lot of supplies for NG, causing a downtrend of its price. But the thing is, when it is cheap, the demand for it will increase. Actually more and more power companies are switching to NG from the traditional energy source of coal. On top of that, due to the very depressing situation for oil and gas companies at the moment, increasing number of rigs are stalled and the production is going to be substantially reduced moving forward. 

Therefore, if we suffer a bit more severe cold weather in the coming months, I'm sure the NG price will shoot up greatly. One way to trade this idea is via the major NG producing company, Range Resources (RRC). As with NG, RRC is also in a bust mood with very depressed sentiment towards it. But if NG goes up due to any surprise, a jump of 15-20% of RRC is not out of reach. Of course, this is a risky contrarian trade and don't bet with the money you cannot lose. And better to place a tight stop loss, e.g. 5% from the current level.