Morning Thoughts – Oldinvestor

Randy Brown had shared a link on Twitter; I glanced at it, sent to my wife and told her “this might be cool.”

https://www.shell.us/careers/about-careers-at-shell/our-business-at-a-glance/trader-development-programme.html

Last night my wife asks, “are you going to apply to that thing you sent me?”

I have no idea if I’d even get a call back. I’m very self defeatist with this whole trading thing; it really is more than me being humble. I know I could have some level of success as a trader in the industry with a conservative approach. I just know so little still….

On with Natgas, I’m not caught up yet. I heard some nonsense about a tropical storm, and sounds like it was puny and didn’t do anything. So natgas supply is still intact. The physical market wants to stay prepared for any possible hazards such as a tropical storm turning into a hurricane. That is understandable; this time it just fizzled out.

Overall; demand is strong with power burn once again being the one bright spot in the market for summer demand. Industrial could stand to gain 0.5Bcf/d, but it’s going to come full circle to LNG vs Ass gas. Will associated gas or LNG exports feed gas increase first? and will the other keep pace with the one begins. I like this scenario, because dry gas is caught in the middle, getting completely hammered by these prices. And if I look at region pricing, it could be even worse for some producers on cash markets.

EIA.gov regional daily spot pricing for NG market

Here we can see that Northeast US producers that sell gas in that same region are getting less than Henry Hub for next day delivery. I’m sure this is damaging to someone up there. I really have such little knowledge of if this affects dry producers now, but it sounded good!

I’ll have to continue my thought in a moment, I have a call. Back again. My point is that the natgas producers are already suffering, they’ve shown they are willing to cut back if prices move much lower. So if associated gas comes online, this will apply more pressure to dry gas producers to give in further to cutting future exploration more so than already expected. The problem is still Negative Roll Yield, I term I’ve recently become acquainted to. I’ve always knows what it is and the effects of contango on long sided ETFs. I’ve even explained it here, I have just started using the term Negative Roll Yield. The ETFs roll out of one contract, and into the next contract that is contago. This, in essence, allows for the potential for more room to fall in pricing since the next continuous contract is priced higher than the prompt contract. You can google “negative roll yield” to learn more. Anyway, this negative roll yield is still my main concern and the reason I need to keep my position relatively smaller…. though I”m at 60% now. I need to manage this by reducing sooner than later and not get too excited to add to my positioning, causing unnecessary problems.

Let’s not forget, as soon as LNG recovers, and it will, I’ve got it made.

My position

UNG – 60% in with an average of $11.73 – and waiting

I’m still waiting to reduce, though it may not come this week again. It is ok, the market is moving slow right now. If the market breaks down here, I’ll simply wait for it to slow down again to increase my position. I may be looking for a early exit on part of my position as well. I allude that future if I feel like it is upon me to do so. For now I wait. Good Luck

Oldinvestor