Morning Update Feb 12, 2020

Still waiting, but this morning is interesting…

So my emotional status is in check today. By not adding to UGAZ yesterday, I missed out on a nice recovery. I’m happy to see the market appears to still be trading on changes in weather. This morning’s forecast was an improvement in HDDs. I don’t see it in the map, but I’m not the expert on weather.

I’ve had work interrupt my post, it’s ok, my job comes first. I cheated today and used Webull to my advantage and sold UGAZ before 7am Est, when most brokers allow pre-market trading. I’ve sold UGAZ at $42.41. I will wait to see if prices fall back to the bottom of the current range or close and re-enter there. As for UNG, I will be holding at 89% in for now.

Back from being busy, here are a few more thoughts:

UGAZ on 1 hr chart at Webull

With my paranoia of the LNG market aside, UGAZ is shaping up to follow a new range. I plan to buy at $38.5 with 4% of my funds.

Also aside from my LNG paranoia, fundamentally this market appears stuck, and should stay range bound for a bit longer. Keep in mind, this market is still at record short positioning when it comes to managed money. I believe that as long as fundamentals remain consistent with where they are currently, the price is going to remain consistent with where it is currently. The downward pressure will remain due to a lack of interest to send prices higher. All roads lead to storage on a fundamental basis in this market, and I will remain anchored to that idea.

Natgas weekly inventory vs 5yr Average at

I’ll use this chart again, in 2015 the weekly storage figures vs the 5yr average sucked. 2015 filled storage faster than the 5yr average, showing that there was plenty of supply at the time and no reason for prices to move higher. 2016 was starting out oversupplied, but consistently showed the market was not filling storage as well as the 5yr average, sending prices higher. 2019 looks a lot like 2015. Right now, winter demand can skew this chart terribly. If storage numbers can consistently drop below the 5yr average, the market will begin to anticipate this more and prices will be under pressure to rise instead of fall.

Until then, we remain range bound. Back to work.