Morning Update Jan 3, 2020

With production still holding, and the latest in weather forecasts, it seems prices are destined to see $2 gas. It could very well be today. Storage draw expectation are low for today’s EIA report, though so is the 5 year average. Something I haven’t mentioned before is cash pricing.

Henry Hub spot price and NG1 Daily at RonHenergy.com

Cash pricing is something that is shared publicly while being traded unless you’re part of the physical traders club or whatever. The EIA has regional spot pricing that is supposedly the closing price of the previous day. That’s as close as I can get it. Ron H. has shared the EIA listed pricing above. This much separation of Henry Hub spot pricing vs NYMEX pricing is not very common. Spot pricing is for immediate sale and if immediate demand factors, such as weather are making a big difference, the spot price will go it’s own course. Now, this can tell us that the odds are in favor of NG prices falling if fundamentals continue to be bearish. We already knew that, but this time the price is also being influenced by one more factor, cash (spot) pricing.

I’m tired of looking at 2hr chart, so I’m going to switch over to weekly for this morning and take a different look at this. This has been more my approach this whole time anyway.

NG1 on Weekly Chart at Tradingview.com

What I’m showing in the pink zone is what I would consider the meat of NG pricing currently, between roughly $2.1 and $2.5 to $2.7. I would say anything above $2.5 was apparently worth shorting.

NG1 vs managed money positioning at Spreadcharts.com

As you see here, the last time NG drops below $2, there is record short positioning as well. It does seem a bit odd to me in 2016, short positions start backing off and the price does continue lower for a bit. The present correlation seems to be much more closely tied; when COT positioning jumps, so does the price. All I’m really wanting at the present time, is another one of these jumps.

I could go on and on about this, but there is no one around to argue with, haha, and I have hammered this enough this morning. I haven’t mentioned until now, I fully plan to have enough funds left in my account to take a more substantial long once gas drops below $2. If you have followed my pattern of trades, you’d know that I have spaced out my trades well enough to know this already. What I haven’t shared is that I’ll be rolling into UGAZ if things get dire for NG, but not until then. I’ll share more on this in another post, maybe today.

For now know that I’ll have 25% of my position for sale at $17.12 again, and my next buying target was $16.3, which I didn’t get to fast enough this morning. I’ll buy with another 10% of funds if the price drops below my target.

Gotta go

Oldinvestor

Leave a Reply