Morning Update Feb 24, 2020

Oil and Gas and the rest of the world are down this morning. Fear is very much the driver of this market. Italy is now under the coronavirus spotlight. It appears the virus can spread quickly and does pose a greater threat to life than “The Flu”. This is certainly reason enough to try and contain the virus, but it seems it’s going to get out regardless. It spreads too easily. One reason that just occurred to me, in order to prevent mass panic and such, is to slow down the spread. If the entire global healthcare community is overwhelmed at the same time, this would mean global panic. Even if the virus spreads, as long as it is slowed, hospitals and healthcare workers can continue to do their jobs without the panic.

As for other factors. Fundamentally, the market is the same as it has been, on track for production to slowly decline, demand is holding its seasonal pattern with no real disruptions. Weather is stupid and only influences the market withing a certain range anyway, with the exception of a blizzard when storage is already unseasonably low. That isn’t going to happen any time soon. Outside of potential LNG disruptions and virus outbreaks, the market should hold where it is. Unfortunately, I believe there will be more of both coming. I am not so worried that I am holding UNG, but that I am out of sync with the market movements because of this new layer of complexity.

That’s really all I have to say this morning. I’m not worried, but maybe a bit bummed. There is going to be a swing, there always was going to be a swing… Only now, I don’t know how to time it. What makes sense to me now is to keep my position smaller than I was expecting. I’ll hold with 50% of funds in UNG and not expect a lot, just try an manage potential risks. My plan before this virus issue was to be all-in UNG about now and playing UGAZ back and forth some while natgas moved around in each range. I’m not a fan of moving UNG in an out of the market like UGAZ, it just doesn’t make enough with the smaller % of funds dedicated.

Again, I’ll be holding on to my 50% of funds invested in UNG, I am still waiting for a fresh opportunity to add or reduce. I’m all but certain the wait will be longer than I was ever planning to reduce. That being said, I should also wait longer to add to my position as well… I may run out of ways to talk about this market, but I’ll still be here, doing my best. Good Luck

Oldinvestor