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