Morning Update – March 30, 2020

Production is back up, and holding. So is LNG exports. The country is supposed to be in a shut down state, yet Industrial natgas is blowing away last year at this time. Maybe the surge in demand of many goods is the cause; many manufacturers could be trying working overtime to catch up. I know we are. I work in the food industry; so far there has been a surge in orders. I don’t expect the surge for our products to continue; we shall see. I remain content to have a job.

Without COVID19 in place, I would be all in UNG and looking to roll some funds to UGAZ. Since this is not the case, I’ll be waiting patiently. I have a target of $1.25 natgas to even consider UGAZ. Oil is still shaping up to big a huge factor for gas.

Right now, most of what I’m reading is about stripper wells being shut-in. Stripper wells are those that generally have pump jacks in a field with a very small wellhead. These wells collectively produce potentially 1MMbbls/day, but each one is not worth the effort to bring back online if they have to shut it in. I’m still not convinced these well will be shut in since they cost next to nothing to leave them running. If owned by the right person, they could collect the oil and store it, but how much and for how long? That is the real problem; storage. I’m hearing that in some places of the world storage is full with no new storage plans in place. No one was prepared to expand in a big way.

If storage is full, prices will plummet since no one can buy oil for no place to store it. At that point, storage facilities may even charge to take any more. That is what I hear, but I would imagine shutting in wells will come very quickly. I read somewhere briefly that producers are trying to get out of frac contracts. Anyway, this all leads to one thing that I see, major near term reductions in produced oil. I think this problem is a regional problem thus far, so I have no idea how much associated gas will be shut in with the oil. I do know that production of natgas is still high and holding. If the wind blows just right and news starts flying about associated gas getting shut in, natgas could go to $2 in a matter of a few days. Just the word could send it up. This gives me confidence to hold what I have in UNG, but I’m losing interest in USO.

With all that said, I’m reducing my USO position at $4.21, back to holding with 10% of my funds. and I’ll increase UNG to 50% of funds at $12.31.

USO – holding 10% with average of $5.05

UNG – holding 50% with average of $13.66

I’ll be holding these positions until a drastic move. I will being making sure my stockhoot account is lined up with this position.

I just made a recommendation this morning. Stockhoot does not allow me to make trade recommendations outside of normal 9:30am – 4:00pm est time trading hours. I placed a recommended trade to bring my UNG position there up to 50% invested. We’ll see how it goes. I can also send live messages to my followers that can be sent to your email or phone. You do not have to give them your phone number to sign up for free if you would like to just use an email address. Good Luck