Morning Update Dec 31, 2019

I’m back, at least 75% back. Have I mentioned I dislike vacations/holidays when it relates to work. Because I have to return to work and the stress is something I’d rather avoid.

Anyway, production. Production continues to show signs of stalling. This is common this time of year. Looks like the last few years show similar patterns. It could be March before we know for sure if production will continue to rise much. Drilling and completions activity is important in this scenario. The more wells that are drilled and completed, the more production one can expect in the near future. This can be studied using the EIA drilling productivity report. I still hope to put some info together on this.

Onto the chart.

NGG20 on 2hr chart at Tradingview.com

Looking at February contract, prices are at a tipping point. I’m going to add to my position in a moment because I don’t think prices can break down here. This is a fairly large risk, when looking at fundamentals and non-supportive weather. Pricing should have failed to a new low by now. One could wait for strength to add or take a long position, but this is NG. My guess is prices will still not go up all that much yet, we will continue to see a lot of noise that I’ll be happy to trade around.

As far as the chart goes, it appears to be a the low. From a technical standpoint, the price looks to have consolidated and it is decision time. Wait for a break (by maybe 1%) up/down from here. I’m not supportive of this idea here, because of managed money positioning. Short positions continue to reach record holdings and the price continues to hold around that same area.

I’ll be adding 10% to my UNG holdings. This will put me 40% in UNG total with an average around $17.1. I’m not looking to stop out of this position, but I will sell half of it if UNG gets closer to $17.5. I’m not counting on this happening, I never do.

Oldinvestor