Morning Thoughts – Oldinvestor

May 22, 2020

More bearish news for LNG is out. I heard this as a rumor on Wednesday. Now we know for sure; 45 cancellations.

https://www.spglobal.com/platts/en/market-insights/latest-news/natural-gas/052120-us-lng-cargo-cancellations-mount-for-july-as-weakened-global-demand-persists

The link above from Platts, mentions 45 cancellations for July. If I’m remembering correctly, there were 30 cancellations in June.

This takes me back to ronhenergy.com to look at LNG loads per month.

LNG exports in US Loads/Month and Bcf/Month at RonHenergy.com

30 loads is nearly half of all LNG exports by load, and 45 loads will be 60% to 70% based on recent activity leading up to the wuflu. I expect there to be another drop in LNG feed gas to LNG export facilities. Possibly as low as Jan 2018, or 2-3Bcf/d…. ouch.

US LNG feed gas to all LNG export facilities at RonHenergy.com

And the saga continues. I had mentioned Oil being the main factor in the drop Wednesday for natgas. This is far bigger though not any more surprising. To remove another 3Bcf/d of gas from US demand is another nail in the coffin for another producer. Obviously I have an uphill battle buying UNG here.

NGN20 daily chart using Schwab/Street Smart Central

July has strong support around 1.825. If you were all out, this would be the place to test a long position. Granted that LNG news is very bearish for near term storage, this could be a point at which July prices break down. One thing for me is still certain, this market is range bound at best until something changes to ensure storage will start subtracting it’s over supply vs the 5 year average.

My position

UNG – now 50% in with an average of $12.03 – I chose to purchase with 10% more funds last night because I feel the bottom is in or near and I have not been utilizing my funds. This does require me to use even more if prices fall harder. I’ll have to be more patient if the price moves lower from here. I will not be buying today unless UNG falls closer to $10, which probably will not occur on a friday, even with the bad news in LNG. Market makers already got that news 2 days ago anyway. I’ll be happy to reduce 10% at $12.03, but I don’t believe that will happen today either. I’ll go ahead and place the order to reduce, but with no expectation of it filling today. I’d like to stay an think about what else I have to ramble on about, but I must work. Day jobs are good… Good luck

Oldinvestor