Morning Thoughts – Back to work

Draw season is now in full swing, drilling in gas dominant areas is increasing, and I’m back to work. With a little help from weather, the storage surplus is again expected to shrink quickly. How far up will prices move?

It’s hard for me to accept, but I believe it’s all up to weather right now. LNG demand is nearly maxed out, and should remain that way for a while. European storage surplus seems to be shrinking. As we’ve seen in the last few weeks, a wild swing in winter related demand can make all the difference in a storage deficit/surplus throughout winter.

Lack of production is still on the side of bulls, but this will change mid to late winter.

Here is one example of this; EOG has already ramped up on drilling activity, and is planning to turn on new wells in their newly discovered gas field. Granted, production will take a while to get back to “pre-Covid” or even “pre-LNG panic” levels. I say pre-LNG panic, because if you remember, the LNG market was starting to get backed-up due to the surplus of gas everywhere before Covid ever hit.

I’m still a believer in UNL, but it will be slow to pay off. Something I think I noticed this last week was that market makers for UNL take their sweet time to catch the price up. Liquidity sucks for UNL, and the ETF may be allowed to take forever to increase its price with the market. Even when there are not buyers for UNL.

My positions as of pre-market 11/30/2020

I’m pretty scatter-brained with work and such. Monday after a holiday… Still holding UNG and UNL. I posted to Twitter and will mention now; I exited my KOLD 45 strike. I got 65% of the max gain, not including commission, still very close to a $300 gain. Still at a loss on the 40 strike, but I’m comfortable with the trade, so no worries. UNG has some work to do; I’ll do a little waiting, and maybe a little buying of dips. Be patient for that. Back to work! Good Luck


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