I’m going to repeat myself a few times this week, starting now. LNG has recovered more than production; great. Production continues to show its unwillingness to increase output; possibly some due to low oil prices. Since I don’t have access to live regional pipe-flows or regional storage estimates, I’m waiting for next weeks EIA report. LNG has been strong coming into this week. And the weather has gotten closer to average lately.
My point is this: in an effort to proved to myself that South Central isn’t going to reach capacity. I think next week’s EIA report could be one of the more important reports to me for South Central storage. I’m slowly letting go of the theory, but I still need strong evidence. If South Central Non Salt is at 90% capacity and this is 900Bcf, then 1000Bcf would be full. this is 100Bcf to get to that point. Last week was a build of 13 but LNG was very weak. There are 9 weeks left to report by EIA before EOS (End of Season/Storage). 13*9=117. So with the increase in LNG demand of say 2-3Bcf and potential of an additional 1-2Bcf more in LNG demand, this could swallow 15-60Bcf/week. This is a big range on LNG demand, and will it all come from South Central? I don’t think so but it is still too close for comfort in my opinion. This is why I’m putting a lot of emphasis on this theory still.
Again, power burn will be decreasing while LNG exports are increasing, but if production was hardest hit in Texas, then I believe bulls should have nothing to worry about. I saw a headline that said Cameron LNG could be down until November? I doubt it. If anything, they will be partially down. I’m sure they are at least inspecting and taking note of what needs repaired, if anything. They can still bring in generators to do any repair work. They simply need power to run chillers and NG compressors. And maybe that takes longer than I know to prime those systems. Either way this is a factor that is important to consider.
Not to latch onto this south central theory, it is just getting to the do or die point.
OH! So I decided to sell a covered call against UNG. Maybe I should have just bought UNG, but the premium looks good enough to me and I’m not certain there is a lot of strength in NG prices right now. So I have maxed my account out with SLB and UNG covered calls and still holding UNL with 50% of my original $1000 investment funds.
I’ll update my positions with the following spreadsheet screenshot. Covered puts in red, Covered calls in blue, and UNL shares long.
I’m going to hold here and see what happens. I’m a bit nervous about BOIL, but I just keep in mind this is a long term trade and I want it to go against me in order to short it directly from a higher point. Sometimes a strategy just needs to be given time to work. Good Luck