Morning Update March 2, 2020

I have not posted any updates to my other website, I was able to get some work done on my truck this weekend. I’m prone to hibernating in the winter. I hate the cold; like 50 degree F cold. There’s nothing quite like that sense of accomplishment from physical efforts.

Anyway, ready for new round of coronavirus panic and LNG drama. Glancing at data, everything looks about the same. I would imagine it’s safe to say production is not going to increase for a while. Also, there is always the theory that production gets so far behind on planning new wells that the market will temporarily struggle with under supplying demand.

I haven’t seen anything new as far as actual cancellations in LNG exports, but I did find this: Train 2 Of Cameron LNG Liquefaction Project Begins Commercial Operations Train 2 is part of a plan to have 3 trains for that particular facility. Train 3 has a completion date sometime in the second quarter of 2020. My guess would be closer to July. We’ll see…. With new expansions of LNG export facilities should also mean more contracts to ship LNG.

One more key article for the immediate would be this one: Sempra says coronavirus outbreak has not hit talks with LNG buyers. Basically Sempra is making a statement that they plan to continue operations as planned, and have not had any disruptions.

Outside of that good news, weather seems to be quite bearish after the next week of cold. Winter never really came, and not there is no real good reason to even consider it until June or so. I’m going to stop mentioning weather unless there is something worth mentioning.

As for my positioning. I’ll never get time enough to work on all that I want… I have shifted my strategy to be more cautious on the long side. I’ve said this before, but I’ll go again quickly. My original plan was to be fully invested in UNG around $1.85, leaving plenty of room to roll into UGAZ. I did get a small amount of UGAZ, and capitalized on some small moves. The coronavirus, along with drama in the LNG market has prompted me to adjust my strategy to be more conservative. I will remain long in UNG, but now I want to wait and see if the market will get to $1.5, and threaten going lower. I know this is a drastic shift in strategy, but there is too much unknown still about the Coronavirus. My off the hip analysis here is that the market is going to remain in the range. Speculative buyers would normally be bargain hunting at this price, but there is too much doubt in the market. I believe the market could respond with another few cents drop with more news of LNG cancellations. I believe the market is nervous of the chances of this happening.

I’m currently holding 75% of my funds in UNG with a break-even of $14.99. I’m showing my account is down about 7.7% from inception. I’ll be patient for NG pricing to get to $1.5 before adding to my position. Also, I want to reduce at, or very close to my break-even price. This is always subject to change, but that is my baseline strategy for now. Good Luck