Morning Thoughts – Early draw on Storage

Today the EIA will report a draw on storage when there is normally a build for week 44. The first draw on storage, in the last 20 years, generally happens on week 46. Occasionally, there will be a draw on week 45, rarely on week 44. I may have missed a year, but I’m showing 1997, 2002, and 2006 in the last 25 years. In 1997, there was a draw on week 44 and a build on week 45. This same scenario is possible now with residential and commercial demand swinging 15Bcf/d with changes in weather.

My overall stance is still the same, I’ll be buying the dips. Extreme swings in weather even out in the end to create the average. Average temperatures may be bearish, but not enough to offset the lack of current production, and strength in LNG exports. The biggest bear factor, that could come as a surprise damper to winter natgas pricing would be lack of LNG demand.

Keep and eye on European gas storage here

I don’t have any leads on Asian storage.

Heading into winter, there shouldn’t be much concern about LNG; coming out of winter may be a different story. I’m buying the dips for now.

My positions as of 11/5/2020 pre market

SLB has taken forever to get just back to break-even. But that fits right in with the theme for me this year. I’ve taken forever to make anything happen. As long as Biden doesn’t shut down oil exports… Anyway; UNL is still hanging in there, UNG just crossed into the green again in pre-market trading, and KOLD is barely hanging on. KOLD looks good based on the mark for the options portion of that trade, but I high doubt I could exit my KOLD put for 11.3 right now. So that trade is probably closer to break-even as well right now. I actually tried taking on another KOLD covered put yesterday, but couldn’t get the deal I wanted so I stayed out. I’ll be holding my current positions today. I don’t a major dip, but if it happens, I’ll consider it. If UNG jumps to $12, I’ll reduce by at least 5 shares. If somehow UNG goes above $12.5 today or tomorrow, I’ll exit UNG. With the current weather prediction, I doubt price moves get too exciting.

On my mean reversion, I don’t have time left to harp on that, but here are the latest results.

UNG on 2m chart running my redneck strategy

I haven’t changed anything from the beginning, except for the trailing stop amount from 20cents to 60cents. I’ll keep this unchanged from here on. I also should create a new page with continual updates. Look for that to happen soon. I may try and do it so the page loads the latest change to the top of the page. Also I should publish this thing at some point, so anyone can check it out any time. I have a meeting about something I think should be left alone. bla.. Good Luck.


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