Morning Thoughts – Oldinvestor

May 20, 2020

What do you know, I sit down to start typing and get called away… I should return.

Come to think of it, I don’t have much alteration to my thoughts since yesterday. Production still appears to be falling. I’ve seen a lot of discussion about who’s right about where production really is right now. As in, what is actually being produced. I don’t know of a single entity that is capable of collecting and processing data from every well in the US each day. They all take samples, possibly from as many sources as they can reach out to, then reverse engineer a number they suspect to be the total production for the US. Granted, when there is a major change in production, number from one data source to the next will be skewed. Then EIA gets their data from Pointlogic, part of OPIS, which is now IHS Markit or owned by…? Don’t listen to me.

The overall background has not changed, there was a large drop in production, assumed to have happened over last weekend. This drop will still effect the entire market in a bullish manor, but will have limited effect.

  • Production drop = bullish
  • Some wells are hard to restart, some are not – keep this in mind = limits bullishness
  • storage fullerer than normal = bearish

All roads lead to storage. In 2019, storage swing from under supplied to over supplied vs 5 year average. Low pricing was beginning to solve the problem and the pandemic has simple accelerated the issue. I want to jump ahead and say that storage will swing from over supplied to under supplied. I’m on the long side of natgas, so it should be that exciting. But…. Keep this continual warning in your back pocket, shale is quick to produce, everyone has seen it happen, a few times now.

My position

UNG – 30% in with an average of $12.36 – limit order to sell down to 10% holdings at $12.95

I remain with my limit to sell at $12.95. The market is trying again this morning. I feel 30% in a good position since I’ll make a small profit on a move higher, which is all I ever expect. 30% is ideal to me if prices fall again, I have plenty of funds to increase and improve my average. I have not plans to buy yet. Good luck