Morning Thoughts – EIA report day

Correction: EIA report is tomorrow. Most likely at 10:30est time

Today’s EIA report may not be sooo much more important than any other, but it may be perceived that way. Since there has been such a slump in weather related gas demand recently, the EIA report is expected to be on the fence. Lets break it down.

So you could take HDDs + CDDs and add them up for the week that the EIA report will be about. The storage weeks go from Friday to the next Thursday. Oct 3, to Nov 5, I Averaged 15.1 TDDs by the chart below. This would be for week 45, which is what EIA will be reporting for today. We already know the HDD+CDD for week 45 in advance, because that information is more up-to-date and free to access from National Weather Service ( I think).

HDDs + CDDS for 2020 at RonHenergy.com

I didn’t realize until now, Ron has already done the averaging in this next chart I’m sharing below. Ron is also showing 15.1TDDs for week 45. That makes life a little easier.

CDDs+HDDs per week at RonHenergy.com

So now you look at the next chart and compared to last year to get a rough idea of how much demand there will be for the week based on the average HDDs+CDDs (=TDDs). Ron hasn’t updated this scatter plot for week 44. I’ll pester him about this later.

Anyway, RonH has done the hard work for us again and has a scatter plot (below) showing inventory changes vs TDDs.

KEEP IN MIND: This is quite rough and anomalies happen, like the EIA doesn’t always report what you expect based on your figures. Don’t try and day trade, expecting a draw and a big jump in price.

So according to this chart, I’m seeing a slight build for this week. The white line isn’t going to be perfect, but it gets us closer. And if you take the slope of 2019, and the 4 data points from 2020, this week will clearly be a draw.

All this proves is that the EIA report will be close to 0 and we should expect a small draw or a small build.

Inventory Draw/Build vs TDDs at RonHenergy.com

I will be holding long, and hope to see a draw. How about a draw of 1 or better. If you were to look at the top chart again, you would see the there are some strong TDDs and some weak TDDs for week 45, and then also for week 46. Week 46 may actually be more bearish than week 45…

What is most important here.

Storage draw/build vs 5 year average for respective years. Found at RonHenergy.com

The important part

What is important to me is that even with weak demand, storage is swallowing up this surplus is chunks vs the 5 year average. This will be what preach until production recovers substantially or LNG crashes. I’m already thinking about tomorrow’s post, I’m out of time for today.

The chart below says it all to me. This would be hard to scrutinize right now. I’ll hammer on this tomorrow. on to my positions..

Inventory change vs TDDs at RonHenergy.com
My positions as of pre-market 11/12/2020

Looks like SLB has gotten a reality check back to $17.40, this is actually a good thing for me, as it will slow down SLB some. Either way, I will most likely be holding onto my covered call for SLB until the 12/4/2020 expiration or very close to that date.

UNL and UNG are looking nice. At this point, I plan to hold where I am into next week. Even if there were a pop today, I would not even attempt to day-trade it. I’ll simply hold for that storage surplus thing to vanish. You know, that thing I keep rambling about. EIA report is at 10:30est time. Good luck.

Oldinvestor

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