Morning Update – April 6, 2020

It’s still all about Oil. Oil is good at stealing the spotlight, and this whole week is dedicated to oil thanks to an upcoming meeting between basically OPEC+G20. All this has helped me consider a new trade. Since I’m buying and holding UNG a lot; also buying USO more recently. Why not sell some calls against this to scrape a little profit if the price falls or dances around in a range. Most certainly it limits my gains, but I do that to myself anyway.

About those covered calls, I’m thinking there are a number of equities that could be worth writing calls against as well. I’m liking SLB. Priced near $15, and $15 strike calls are selling for roughly $1.5 against May 15 expiration. That is near 10% premium, plus if there is a surprise jump in SLB from the OPEC+G20 (that’s what I’m calling it now), I stand to cover the whole thing above $150 profit. I’m not going to get excited about it, but it seems like a good trade right now. I could also sell contracts closer to expiration if I think the price may wait to jump. I limit my gains if the underlying price jumps, so not sure I want to go that route.

I’m still holding 55% of funds in UNG with an average of $13.41. If I counted my USO gains, I could apply this to my UNG average and maybe bring it down 10 more cents. I’m not sure. I’m saying this now because I must get to work. I am planning to hold my position and see what happens this week. I know one thing, if the dance continues, I’m ready to start selling calls against the shares. I’m not sure why I didn’t do this before, probably because I’m still fairly green to options. Holding for now. NG fundamentals are still holding with only slight changes in Supply/Demand. It’s more about what happens with oil this week (sadly).

Good luck

Oldinvestor

Morning Update – April 3, 2020

Oh man, I almost missed USO yesterday. I just happened to go to break. So I sold in my 401k account at $5.42 or so, then tweeted, then got to webull and only got $5.16 or something when selling there, then switching over to stockhoot.com and the price was at $4.9? geez, then shortly after that, the price went back above $5.2. Late yesterday I bought back into USO at $5.13 with 5% of funds. I think the hype of the OPEC ++++ + + + meeting is still going to drive oil prices closer to $30. Do believe the market will remain over-supplied even if countries agree to cut back on production/exports. Some countries will simply lie and export what they can anyway, especially when demand starts creeping back online. All-in-all I think a little USO is worth holding long term, and global oil markets have shown they are willing to make changes when prices get this low.

With all this said, the meeting will still be a mess. Countries are already being forced to cut back on exports because the oil will simply not be able to be offloaded to an importing country. So the countries meet and look proactive, but once demand picks up even a little bit, everyone will be scrambling to make a deal to get back market share.

On to Natgas. Pricing got to around $1.55 for prompt natgas yesterday. I’m not the best a pricing for oil or gas, but in my limited experience, $1.5 gas seems similar to $20 oil. Companies cannot survive on either of these prices for very long and many smaller companies are willing to make sacrifices quickly if it will help get a better price for the fuel they are trying to produce. There is word that production is falling, but also industrial demand is falling. Also industrial demand right now probably fall faster than production, but production has already crossed a barrier into an under-supplied market. So the balance is still very close, and prices are worth more than $1.5 if not for the “Wuh-Flu”.

As for my Natgas positions, I bought some more UNG in Stockhoot yesterday at $11.75 with 5% of funds. So right now I”m going to add to UNG with 5% of my funds at $11.69

Currently I am holding:

55% of funds in UNG with an average of $13.41

5% of funds in USO with an average of $5.13

I am going to sell USO right now. CLM20 is at $30, and that was essentially my target, and though I have not done so well with natgas lately, that is what I’m more comfortable with trading. Selling out of USO again at $5.75ish I’ll be holding my UNG position steady today; maybe if natgas prices fall below $1.5, I”ll buy 5% more UNG. Good Luck

Oldinvestor

Morning Update – April 1, 2020

I log into my account and see this

So Direxion is deleveraging 10 funds from 3X to 2X. This is the list

Funds affected are: BRZURUSLNUGTDUSTJNUGJDSTERXERYGUSHDRIP

UNG and USO aren’t even leveraged and UGAZ/DGAZ are not on the list. This is still a good thing to know for anyone focused on ETFs.

As for Natgas, I’m kinda flying blind right now. I don’t have any morning data, but if there were anything to know, it would be easily searchable. I’ve been incredibly busy with work, and incredibly frustrated with humans. These people I work around are not distancing themselves at all. In fact, I go to work on something and there are like 15 people in that one area, and at least 5 of them are standing around talking, it is so frustrating. Did they not get the memo that people that have been working in that are are at home with potential COVID19 sickness. And further, people can be asymptomatic. Meaning they are carrying this virus and they do not know it. I am not so worried about my own health, but this mess is not getting better for this very reason. It is our individual responsibility to distance ourselves. Governments say you should social distance, and the public chooses to for 10 mins and they are back on the streets, and at work humping each others’ leg. Like a dog, that will hump your leg and you cannot get rid of them…

Anyway, I am a little bit tempted to buy some more UNG, but I feel that is rushed, so I will wait.

Still holding 50% of funds in UNG with average of $13.66

Still holding 10% of funds in USO with an average of $5.05

Both of these are at the lower end of their ranges, but I have had such little time to observe anything, I feel I should not be in the market at all. I only see that oil spot prices are falling very hard, everyone i still talking about stripper wells. Stripper well declines will not help gas at all. I continue to hold UNG because any real decline that may show up in production, prices will respond quickly. With oil, I have no home and should not be in USO. I am because the prices is so cheap, that many companies, states, and countries will start making very big adjustments to counter this major problem in oil. If demand will stay this low for another month or so, we may just get enough production crushed that when demand comes back online, it will swing oil prices wildly and I will get $6 for USO to sell.

That is all for today. I’m not sorry for ranting about the virus and these complacent human beings. Please take this seriously, not for yourself, for all the people you will be indirectly responsible for dying if you do not take it seriously. We are all responsible. I sound like my father… Good Luck

Oldinvestor

Morning Update – March 31, 2020

So crowds are showing up to see the Naval medic ship doc in New York Harbor… This is a great sign of the coronavirus problem is only going to get worse. Geez…

Well the hot topic is still Oil and major slowdown in production. Many regional oil prices have dropped below $10, yet NYMEX prompt pricing remains a little too optimistic. I had this idea to short HAL with a Call spread, but I hadn’t considered there could be some bailout money show up for them. So I took 8 contracts for April 3 expiration 7/8 Call credit spread, and that’s all I think I’ll take. I might consider ratios or something else down the road. Surprises will be like a minefield right now. One thing is certain. Oil production is hitting a wall and it should help gas production fall. How much? I don’t know…

Sorry to cut this short, I have shit ton of work to do and I must go focus on that.

holding 50% in UNG

holding 10% in USO

No planned position changes today.

I’m going to start another “service” with stockhoot, maybe do some options trades on there for funzies. This will help me stay active with them and stay sharp with their system.

https://stockhoot.com/ExtServiceInfo.aspx?type=Service&Id=b6931df0-5dad-462e-8d28-06699706a437

go to the link if you haven’t yet to check out my stockhoot page. Unfortunately it does not reflect my actual trades yet, because I have not used stockhoot very long. Also, they do not allow me to make pre-market trades, I don’t like that. We’ll see if that can change soon. Good Luck

Oldinvestor

Morning Update – March 30, 2020

Production is back up, and holding. So is LNG exports. The country is supposed to be in a shut down state, yet Industrial natgas is blowing away last year at this time. Maybe the surge in demand of many goods is the cause; many manufacturers could be trying working overtime to catch up. I know we are. I work in the food industry; so far there has been a surge in orders. I don’t expect the surge for our products to continue; we shall see. I remain content to have a job.

Without COVID19 in place, I would be all in UNG and looking to roll some funds to UGAZ. Since this is not the case, I’ll be waiting patiently. I have a target of $1.25 natgas to even consider UGAZ. Oil is still shaping up to big a huge factor for gas.

Right now, most of what I’m reading is about stripper wells being shut-in. Stripper wells are those that generally have pump jacks in a field with a very small wellhead. These wells collectively produce potentially 1MMbbls/day, but each one is not worth the effort to bring back online if they have to shut it in. I’m still not convinced these well will be shut in since they cost next to nothing to leave them running. If owned by the right person, they could collect the oil and store it, but how much and for how long? That is the real problem; storage. I’m hearing that in some places of the world storage is full with no new storage plans in place. No one was prepared to expand in a big way.

If storage is full, prices will plummet since no one can buy oil for no place to store it. At that point, storage facilities may even charge to take any more. That is what I hear, but I would imagine shutting in wells will come very quickly. I read somewhere briefly that producers are trying to get out of frac contracts. Anyway, this all leads to one thing that I see, major near term reductions in produced oil. I think this problem is a regional problem thus far, so I have no idea how much associated gas will be shut in with the oil. I do know that production of natgas is still high and holding. If the wind blows just right and news starts flying about associated gas getting shut in, natgas could go to $2 in a matter of a few days. Just the word could send it up. This gives me confidence to hold what I have in UNG, but I’m losing interest in USO.

With all that said, I’m reducing my USO position at $4.21, back to holding with 10% of my funds. and I’ll increase UNG to 50% of funds at $12.31.

USO – holding 10% with average of $5.05

UNG – holding 50% with average of $13.66

I’ll be holding these positions until a drastic move. I will being making sure my stockhoot account is lined up with this position. https://stockhoot.com/ExtServiceInfo.aspx?Id=b6931df0-5dad-462e-8d28-06699706a437

I just made a recommendation this morning. Stockhoot does not allow me to make trade recommendations outside of normal 9:30am – 4:00pm est time trading hours. I placed a recommended trade to bring my UNG position there up to 50% invested. We’ll see how it goes. I can also send live messages to my followers that can be sent to your email or phone. You do not have to give them your phone number to sign up for free if you would like to just use an email address. Good Luck

Oldinvestor

Morning Update – March 27, 2020

Production continue to be a shade lower than the previous day. For the most part it is flat, but at the bottom of slight down trend currently. Something I want to point out is Oil production this point.

There numbers are up to week 12 (last week). Ron H. does a great job of keeping track of these numbers at ronhenergy.com

Weekly Oil production at RonHenergy.com
Weekly Oil Exports at RonHenergy.com
Weekly Oil Imports at RonHenergy.com

So I wanted to see if there has been much change in oil production, while at Ron’s website, I thought I would go ahead and look at Imports/Exports. Production hasn’t really budged. This tells me any fluctuation in gas production is not due to fluctuation in Oil production. This is bullish for gas because gas is declining on its own. With any decreases in oil production, associated gas declines will become even stronger.

As far as demand goes… I still have no idea and have been very busy with work to even do a search. By the numbers I have, demand for gas is still looking fairly normal for this time of year. I have heard roomers about demand for Power burn to be weak this year. But that idea cannot carry much weight on the market. Gas is still so cheap, natgas fuel will be used for electric power generation. I’m sure coal prices have plummeted as well, but if gas is less that $2, gas is just easier to deal with if the prices are comparable.

Overall, prices are cheap, demand that is not skewed by the coronavirus will secretly grow and production will continue to decline. It won’t take much longer of oil prices this low, within weeks/months, and oil operations will fall off a cliff. It will still take a while for oil production to decline by much. I should emphasize, this talk of associated gas production declining is not something to get excited about for the next few months. Associated gas is not going to have some drastic change on the market by next week or even next month.

OK, gotta finish up

  • weather – what? how cares
  • gas production – already on the decline, been months in the making already
  • associated gas production – going to take a while and may not be as eventful as you might think – but will boost the mood of NG traders
  • Texas has a lot of gas and a big backlog of DUCs – look for production declines elsewhere
  • Demand destruction – this will become key in the near term
  • Nation wide lockdown – doesn’t mean people will not be working. Big gas consuming industry may still be considered “essential” and keep industrial demand high.
  • Commercial demand – In my limited brain capacity, I think this will be the hardest hit demand category % wise, due to closed retail locations. This is a very seasonal category, so the effect will be small since the season for commercial demand right now is already low.

I’m leaning ever more bullish because of price, production is on the decline, and demand destruction will not be so great to cause much more of a drop in gas prices. This does not mean I expect a large jump in pricing. I just feel it is relatively safe to be long in UNG or short puts. We are talking it will take a lockdown nation wide to push prices lower??? That’s a big deal just to get 25 cents lower out of the price of gas. I hope we do see a price slide soon so I can get in more UNG, it should not last long.

My position

UNG – 44% funds – average of $13.61 – last purchase was 5% at $12.61

USO – 15% funds – average of $5.03 – last purchase was 10% at $4.925

I feel confident enough neither UNG nor USO will move enough for me to make a move, I’ll check back periodically today, and post to twitter or Stockhoot.com. Real quick, about Stockhoot; I’ve signed up for free to try out their service. I’ve started a free to follow official NGETF.com trades. I’m close to my real position of 44% in UNG. In stockhoot I am showing roughly 40% long on UNG. USO is only 5% in, but I’m just giving them a try. It is free to sign up, my trades will remain free for at least the next year or two. I don’t see a future where I charge people to see what I’m trading, but it’s a good place where someone else is tracking my progress and keeping me accountable. Go check it out.

https://stockhoot.com/ExtServiceInfo.aspx?type=Service&Id=b6931df0-5dad-462e-8d28-06699706a437

I am playing with some VIX options stuff under a different “service” that will not affect my NGETF performance, just ignore those. I’ve not been very active with those and I’m sucking at those. What little focus I have right now is still dedicated to Natgas, and little oil. Good Luck

Oldinvestor

Morning Update – March 26, 2020

I cannot focus.

Production is down some, almost 1Bcf/d. My guess, this is maintenance or some other temporary reduction in output.

LNG export facility demand is actually flirting with record consumption. No clue as to how long this will last.

I guess the question here is how far down can gas go on a lockdown. I have no idea how to even gauge that. I think a lot of professional traders aren’t even close with their numbers. Then again, how much longer does the market wait to break away from the demand destruction and move toward $3 gas again? I also have no idea. I’m willing to bet July contract doesn’t go to $1.5, so I’m feeling out options plays for that. Put margin is extremely low right now. I’m more concerned about a spike in IV, how much should I dedicate to margin for selling $1.25 or even $1 puts?

I’m still holding 44% long in UNG at $13.89 – and 15% in USO at $5.03

I’m becoming ever less interested in holding USO as time goes on. Today should be important. We’ll hear about how Saudi responds to the G20 meeting/summit/whatever. It should set the tone for oil prices for the next couple weeks. If it doesn’t go so well, and prices fall, and they fall fast, I will get some USO if I happen to be watching at the right time. If the just creep down today, I”ll wait. I’m talking a move to sub $4, and fast like less that and hour to move 50c.

UNG, I’m going to just hold. It’s too hard to say one way or another. If oil falls hard, gas is going to most likely go up. I’ll still hold. If oil goes up, this could shift the focus for gas back to demand destruction and potential Lockdowns.

If the government is cutting checks to Americans, getting ramped up to support unemployment, sending home all foreign workers to their home countries, my company is handing out waivers to show to local authorities to allow me to get to work (this is a big one for me)… I’m kinda expecting a lockdown, maybe not in every state, but as the spread and overrunning the hospitals in major cities, there will be local/state/regional lockdowns.

overall, I feel I’ll be hanging on for bigger moves overall. Patience and trade on numbers, not emotion. I gotta go. good luck

Oldinvestor

Morning Update – March 25, 2020

I’m sorry I haven’t posted today until now. I’ve been pretty scatter-brained with work. The virus is adding a workload to me that I cannot possibly keep up with. I’ll do what I can. I caught a glimpse of the market. I think the S&P is going down again soon, maybe before the week is up. I don’t know that the VIX will make another horrendous run up because major money has already be stopped out or changed directions enough that the biggest panic moves have been made. The S&P can still find new lows, just at a calmer pace.

How does this relate to Gas. I think I’ve been missing out on some awesome moves in gas because of all the distraction elsewhere in other markets. I am still holding my same positions; 44% in UNG, and 15% in USO.

Not much has changed for Natgas fundamentals. Production has been holding, I know rig counts have fallen for oil in a big way. I haven’t even looked at dry gas rig counts, certain they are falling. I’m not so interested in rig counts since this is more forward thinking that my typical strategy.

I’m probably not allowed to say anything about my company, but… If a group of Germans were in an American manufacturing plant, like say… a tire company has bought some tire making equipment from Germany and they also handle the install. That German equipment company may be telling the American company they can’t finish an install or do the finalized testing because they need their people back to come home and be with their families. This type of scenario might be something to think about on a large scale. Hampered progress.

Anyway, I’m glad to have my day job and hope this is over soon enough we all get back to something a little more normal soon.

I’ll keep holding my positions where they are, waiting for a drastic move. good luck

Oldinvestor

Morning Update – March 24, 2020

I hate that Oil is “too big to fail” and Natgas seems an afterthought. I’m too light on USO. The US Government is going to get involved soon with Oil, not a word about natgas. The mere fact that $20 oil draws 100 times the attention itself than $1.5 natgas is enough to make the decision to buy more USO. So my reasons for buying more USO.

  • Most oil companies throughout the world are nationalized, and there are no laws against communication to help boost pricing.
  • These countries with nationalized oil companies are hurting and should be willing to do something soon.
  • The US government has already mentioned it will be getting involved by buying 77MMbbls of crude from american companies. They may also impose import restrictions; we’ll see
  • The price is simply too cheap to pass up.
  • US Capex of drilling, well completions will be cut back, which will have a lagging effect on US production growth down the road, causing a bigger potential price swing. This last one is a bit beyond my scope; and with global supply where it is, this last reason could be voided.

I’m buying USO at $4.93. I now have 15% of funds in USO. I’m going to publish this and move on to natgas. This is NGETF.com after all.

Natgas, what about natgas… It’s being pushed around by oil and the virus. Right now, without outside influence, Natgas is very close to or has already swung to an under-supplied market. And I have a call…. back later. this is not working.

I like my job.

Managed Money position for Natgas at RonHenergy.com

With both longs and short piling out of Natgas, the price seemed mostly unaffected by the large position adjustment. This should teach us something. What I’m learning here is, not any one topic should be the focus of your natgas strategy. Weather, Positioning, Production, Power Burn, LNG exports… It is all combined, all the time. Positioning changed in a huge way, but because of fear of demand destruction, the market barely moved on the change in positioning. Any one factor is not enough to move the market when other factors may be offsetting. This combination of events has left an impression on my, hopefully one that will help me make a better choice in the future.

I gotta cut it off. I added to USO above, I will be waiting today to see what else happens. No other position changes planned today. I need to be patient today. Good Luck

Oldinvestor

Side note: If my posts seem crazy and unorganized; this is due to the urgent nature of my job. Someone calls for help, I get up and go. I have to leave everything else waiting until I can get back to it. Sorry for the mess.

Morning Update – March 23, 2020

More test = more cases… Imagine that, the US is in third now with number of cases. Beware of that kid that just got back from Florida. Italy is still damn near 10% deaths to number of cases? Maybe they are not testing enough. I’m really wondering if anyone is keeping track of number of positive/negative test results? That might indicate the number of cases is far greater and help the accuracy of how many actually have it that aren’t being tested.

Oh yeah, this is a blog about Natgas! Fine… Weather is bullish, but we don’t care… Oh yeah! HFIR tweeted all their demand charts last night on Twitter. That’s a good start. Demand on all levels is still very strong, especially Industrial and Power Burn. I think both of these will suffer some, yet I have no idea by how much. Industrial will be swayed by economic demand. Power burn will stay fairly strong, simply because the price of natgas is low and everyone who can, will be burning gas to generate electricity.

Production has remained steady from a few weeks ago. I mentioned a dip in production by about 1bcf/d. The dip occurred, then gas returned, and currently production is closer to the top of that scale. Over the next few months, production will slowly decline.

As for the immediate, “the virus,” and the economic impact is the big factor. To go along with this big scare, apparently there were/are some investment firms being forced to cover positions on both sides of natgas and oil.

Well I was going to buy another round, got called to a problem that should have been fixed by someone else on Friday, but they couldn’t find a cable that I located in about 2 mins. Come back to see “Fed announces limitless asset purchases”. Demand destruction panic is now be propped up and I will not be buying today. Well damnit…

Sit tight, wait for the next opportunity. I will be waiting today. No changes to my positions. Well, unless somehow there is a vaccine out of nowhere that is being used and things magically get back to normal by tomorrow? This news is a flash in the pan.

Oldinvestor