First off, what do we know (or think we know 😉
- Oversupplied market
- record short positioning among managed money
- Weather whipsawing, but close to average
- LNG still to look forward to (biggest growth in demand)
- Production is showing signs of stalling (but… it probably won’t fall for a while)
- Pricing is low, but IMO just below of being “fair”
So my take at this moment.
It appears we are still holding, and of course I’m holding long. I want to add to my long position, but I’m not going that far out on the limb here. There is a slow grind higher, but there is also no fundamental reason (like weather) to climb any faster. This makes me think that if we do get any kind of cold shot, it will give long position to take over for a short time. This is still a long shot, since it must get cold and we also run the risk of a warm spell that could send prices to $2.
LNG is really too distant a factor to consider right now, the market is oversupplied and is still on course to an eventual $2 without a fundamental change. I want to say there will be plenty of time to react to these changes. We shall see.
As for today, I’m holding my long with stops kept at $17.1 on UNG and I’ll place stop on my QGF20 position to $2.24. I’m only hoping to fill this gap and then evaluate an exit price; If I were to just pick a number right now, that would be $2.40. Without serious capitulation, we are not going to $3. Oversupply… Keep that stuck in there.