Morning Thoughts – Oldinvestor

Something that stands out, but is small would be Canadian imports. Canadian imports were relied upon once upon a time. And they may still be regionally in the US during winter months. Anyway, Canadian imports have been 1Bcf/d lower y-o-y. Imports have been on the decline every year, but it is worth mentioning.

Back to LNG gloom, looks like nothing is stopping Qatar: Qatar’s LNG expansion projects will not be affected by current volatility This article speaks of some near term topics such as delays and the Wuflu, but mostly it is about Qatar expanding by 2025 and 2027. This is not so much a concern for now.

On a good note for once. Here is an article I happen to see yesterday after I posted: As Chinese LNG Imports Increase, U.S. Gains Market Share. China wasn’t on my radar, the US hadn’t exported but something like 7Bcf to China in all of 2019. So far this year, the US has sent 38.6 Bcf over 11 cargoes.

LNG cargoes to China YTD on

Though it may still be a struggle to find a home for all that LNG, it is good to know China is still an option.

Since it is Thursday and I’m already at RonH Energy, I’ll point out storage.

Year over Year NG inventories at

So gas storage is something like 800Bcf higher than last year and 400 something Bcf higher than the 5 year average to this point in the year. What has prices so low, is the angle of that white line. All roads lead to storage. Though US inventories are lower than they were at this time in 2016, prices are staying down because of the threat of setting a new record high in storage by EOS (End Of (build) Season). It seems pretty clear on the above chart the current trend is much more steep of an incline than in 2016/17.

Luckily lower prices have done their job in causing producers to cut spending on wells that are drilled now. The hope for me, these cuts in drilling now will show stronger signs of an impact on production by winter. The impact doesn’t need to be great in and of itself, but there needs to be a seed planted on the thought that there will be a lack of production and strength in demand to spur pricing.

My position

UNG – 80% in with an average of $11.22

I’m back in waiting mode. UNG has made its way above where I bought my last layer (barely). I’ve considered placing a stop on this last layer, but it’s really more about the negative roll right now than an actual move lower in NG prices. The contango and negative rolls will impact UNG more than falling prices. Falling prices will recover, but negative roll yield is forever… I’m going to do my best to wait out today. HFI is projecting a build of 80 for today’s report. I’ve not checked to see what everyone else has, it will be all over twitter. @TradersCom usually has a list. There are some very sharp people who guess the build and are generally very close. I think anything stronger than the 5 year average will be taken as bullish. I’ll be waiting for sub $9 or $11.22 on UNG. Good Luck


Another article I just saw the headline to but haven’t been able to read yet:
U.S. Is The Surprising Winner In China’s LNG Market