Morning Thoughts – All eyes on LNG

Did I mention there was an oil rig sunk in the Calcasieu Ship Channel. This is the path to the Cameron LNG export terminal. Cameron is still flowing gas into their facility at the moment, probably expecting the Corp of Engineers to clear the sunken boat soon. There is also another rig that “drifted into the Sabine Bank Channel” but has not sank. That is “being investigated”, and probably moved as soon as possible. It is also not completely clears as to whether other boat traffic is simply allowed yet to just fairy past the stalled boat. There is an LNG tanker at Sabine Pass, but it may also be waiting to leave. Hmmm.

Prices are up this morning. LNG is flowing to all export facilities, so this is a good sign. If I were holding UNG, I would probably be looking for a reduction. I will continue to hold UNL, as many spring/summer prices are still near or below $3. I feel like even summer 2021 prices will get to $4 before production is back on its feet again. That’s still going out on a limb, because storage must get used up in order for summer of 2021 to get anywhere closer to $4. But that is my big bet moving into next year.

Futures pricing vs Storage surplus/deficit at

I’ve mentioned this chart in a few posts already, but it’s worthy of sharing at least once a week. Storage is at a surplus, but is on the decline in relation to the 5 year average. “Near-month futures prices” are in the upper/middle of the range for this chart. The storage surplus is shrinking still, no matter what is going on with LNG. LNG is mostly back on track and looking to increase output. At that point, it will be a matter of how fast do we climb out of the surplus hole and start digging a deficit. The price will adjust according to this chart. It is right here and is proven all the way back to 2012. Since storage is headed toward a deficit with 2021 now backward to 2020 contracts…. and.. it should take a while for production to ramp back up… In the mean time, prices should get pulled up through the next 6 months to a year. I gotta go.

Current Positioning as of 10/19/20 and 10/20/20 pre market

I’m still holding what I have. I feels it’s a bit too late now to enter UNG. Figures this would happen. I’m happy to hold where I am. Good Luck


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