Morning Thoughts – Oldinvestor

Same story, different day. I first saw this article by Reuters yesterday: Buyers of U.S. LNG to cancel 40-45 cargoes for August loading: sources.

More almost confirmed cancellations of US LNG exports, in my mind, is, without a doubt, the cause for yesterday’s price drop. Did I use enough commas in that last sentence? That’s all I have, because that’s all there is. UNG is approaching lows again. I do not have a lot of confidence in the idea that NG will range here, but it feels this way. There was originally said to be 30 or so loads of LNG cancelled for June (loaded in June), and 40 or more loads cancelled in July. Well… It’s not July just yet, so I’m guessing LNG feed gas is going to drop further, potentially to what I had originally estimated.

Monthly number of loads and Volume exported at RonHenergy.com

If there are a potential for 70 loads in a month (and I think I’m being liberal with this number), then 30 cancellations would equate to 40 loads total in a month. Of course 40 cancellations would be 30 loads total when compared to 70 potential. 40 loads would comparable to early 2019. 30 loads in a month should be closer to late 2018. When looking at the feed gas chart…

US LNG feed gas from mid 2018 to present at RonHenergy.com

I want to say 4 to 4.5Bcf/d should be expected for the June cancellations and 3 to 3.5 Bcf/d for July/August. Barf… I think I originally considered early 2018, closer to 3Bcf/d for feed gas rates. Either way, with a new round of cancellations, there could very well be a further drop in feed gas. More of a drop will not be as drastic than we’ve already seen but it will be a while before there is any meaningful recovery of LNG feed gas. Double barf…

My position

UNG – 60% in with an average of $11.23 – I’m content with holding to see if new lows are reached

I stopped out of my last 20% layer of UNG at $10.20. I’ll be ready to buy it back up soon, but would like to see if today is another down day with the latest news for LNG. Being patient is good. I’m just glad I’m not in UGAZ, slowly dying from decay and now being de-listed from any exchange. Good Luck

Oldinvestor