Morning Thoughts – Oldinvestor

May 22, 2020

More bearish news for LNG is out. I heard this as a rumor on Wednesday. Now we know for sure; 45 cancellations.

The link above from Platts, mentions 45 cancellations for July. If I’m remembering correctly, there were 30 cancellations in June.

This takes me back to to look at LNG loads per month.

LNG exports in US Loads/Month and Bcf/Month at

30 loads is nearly half of all LNG exports by load, and 45 loads will be 60% to 70% based on recent activity leading up to the wuflu. I expect there to be another drop in LNG feed gas to LNG export facilities. Possibly as low as Jan 2018, or 2-3Bcf/d…. ouch.

US LNG feed gas to all LNG export facilities at

And the saga continues. I had mentioned Oil being the main factor in the drop Wednesday for natgas. This is far bigger though not any more surprising. To remove another 3Bcf/d of gas from US demand is another nail in the coffin for another producer. Obviously I have an uphill battle buying UNG here.

NGN20 daily chart using Schwab/Street Smart Central

July has strong support around 1.825. If you were all out, this would be the place to test a long position. Granted that LNG news is very bearish for near term storage, this could be a point at which July prices break down. One thing for me is still certain, this market is range bound at best until something changes to ensure storage will start subtracting it’s over supply vs the 5 year average.

My position

UNG – now 50% in with an average of $12.03 – I chose to purchase with 10% more funds last night because I feel the bottom is in or near and I have not been utilizing my funds. This does require me to use even more if prices fall harder. I’ll have to be more patient if the price moves lower from here. I will not be buying today unless UNG falls closer to $10, which probably will not occur on a friday, even with the bad news in LNG. Market makers already got that news 2 days ago anyway. I’ll be happy to reduce 10% at $12.03, but I don’t believe that will happen today either. I’ll go ahead and place the order to reduce, but with no expectation of it filling today. I’d like to stay an think about what else I have to ramble on about, but I must work. Day jobs are good… Good luck


Morning Thoughts – Oldinvestor

May 21, 2020

The big drop yesterday? What the hell happened. Josh had mentioned the weakness in the last three days. I noticed this as well, it was hard not to. UNG had pretty much gone to $12.5 and stopped each day. Yesterday was different; the 10:30 candle on 5 min chart is larger, it stands out. This was during one a very prominent surprise oil draw during the EIA oil report that normally is published at 10:30 est. on Wednesdays.

So my main focus here is that oil got a surprise bullish report, this is well received by oil of course, not so much for natgas. This is going to sound more obvious to most readers, but for now I want to sound obvious to most. When the pandemic was starting to have a major effect on demand, it was perceived that oil production was going to crash down all around us and the associated gas would be drug down with it. This did happen, but to what degree?

Daily production posted from HFIR

Natgas production was already on the decline due to horrible pricing for producers. I would say this is responsible for lowering production to 91-92Bcf/d; normal decline. Another 1.4Bcf/d, we just learned, is due to a dry gas producer (EQT) in the northeastern US. This brings the total production down to 90.6Bcf/d. Now keep in mind, everyone is still not totally clear on what the correct production numbers are, my self included (obviously). If production is as low as 88Bcf/d right now; it is possible the drop in associated gas is responsible for a reduction in natgas production by 2.6Bcf/d. That’s drastic…

Circle back around to now. If oil had one of the most bullish surprising days, at least in a long while, especially on the back of such bearishness and during a high volatility time with high running emotions…. And… we just rode a wave in natgas due to associated gas falling. It is possible that when oil reverses it’s mentality back to prices are climbing, the us oil market has quickly swung back to being under supplied; this is bearish for natgas. Now I think natgas seems to be, often, pulled around by the horns by big players. Not in a market manipulation kind of way, but just in a big influential kind of way. I don’t really know how to compound on that right now. plus I now have a call, I want to buy some UNG this morning, but I must answer this call first.

Back again. to recap, Natgas hit a ceiling Monday, Tuesday, and Wednesday. So maybe that is all natgas has in it for now to the up side. I still lean more to the bull side because of pricing and what it is slowly doing to the market. Oil did drag down associated gas, but we aren’t sure this caused a 2.6Bcf/d drop in natgas production. That number could be way over rated, there have been revisions since that chart above was posted. The drop in production was not as drastic. So the drop due to associated gas could be closer to 1 – 1.5Bcf/d. Also oil isn’t going to just jump back online. Let’s not forget, pricing for oil and natgas are both much to low to allow production a fast recovery. There are still bankruptcies to process and capex to cut even now.

I need to speed this along

My position

UNG – now back to 40% in with a new average $12.16

I’m interested in adding another 10% to UNG closer to $11 if we can get there today or tomorrow. July is again 15c below $2. It feels as though we are swirling the drain again. That, to me is a fair indication to buy. I’m betting there will be more dry gas production slowing/cutting soon enough to give natgas pricing another shot. Until I hear solid news of more LNG cancellations, I feel I’m being cautious enough of that for now. Report comes at 10:30 est time for natgas. the link well auto refresh at 10:30.

I will add during/just after the report is released on a sizable drop anywhere near $11 in UNG. I will also reduce if somehow UNG jumps to my average of $12.16. 10% to buy or 10% to reduce. Good Luck


Morning Thoughts – Oldinvestor

May 20, 2020

What do you know, I sit down to start typing and get called away… I should return.

Come to think of it, I don’t have much alteration to my thoughts since yesterday. Production still appears to be falling. I’ve seen a lot of discussion about who’s right about where production really is right now. As in, what is actually being produced. I don’t know of a single entity that is capable of collecting and processing data from every well in the US each day. They all take samples, possibly from as many sources as they can reach out to, then reverse engineer a number they suspect to be the total production for the US. Granted, when there is a major change in production, number from one data source to the next will be skewed. Then EIA gets their data from Pointlogic, part of OPIS, which is now IHS Markit or owned by…? Don’t listen to me.

The overall background has not changed, there was a large drop in production, assumed to have happened over last weekend. This drop will still effect the entire market in a bullish manor, but will have limited effect.

  • Production drop = bullish
  • Some wells are hard to restart, some are not – keep this in mind = limits bullishness
  • storage fullerer than normal = bearish

All roads lead to storage. In 2019, storage swing from under supplied to over supplied vs 5 year average. Low pricing was beginning to solve the problem and the pandemic has simple accelerated the issue. I want to jump ahead and say that storage will swing from over supplied to under supplied. I’m on the long side of natgas, so it should be that exciting. But…. Keep this continual warning in your back pocket, shale is quick to produce, everyone has seen it happen, a few times now.

My position

UNG – 30% in with an average of $12.36 – limit order to sell down to 10% holdings at $12.95

I remain with my limit to sell at $12.95. The market is trying again this morning. I feel 30% in a good position since I’ll make a small profit on a move higher, which is all I ever expect. 30% is ideal to me if prices fall again, I have plenty of funds to increase and improve my average. I have not plans to buy yet. Good luck


Morning Update – May 19, 2020

To extend thoughts on the big down revision in production this weekend, causing prices to gap up Sunday… Josh Heller shared with me that Equitrans Midstream reported it was notified of reduction of natgas (

The article I shared is only a quick update, it’s not a full article. It does mention EQM pipeline and speaks of Pennsylvania and Ohio. This area would be part of the Mid Atlantic region as viewed by the EIA. I’m not well versed in regional pricing or their effects on NYMEX pricing of natgas, but one thing stands out; 3 of the main Northeastern regional prices listed on the EIA website look pretty rough. These prices I’m showing below, I believe are for yesterday trading, or possibly the weekend. Either way, it is recent pricing for the entire region and it looks convincing to confirm why a producer would want to shut in wells. Dry gas wells, in a region of strong production and large, high producing wells.

EIA daily spot pricing
Wholesale Electricity and Natgas by region at

This tells me producers are starting to weigh the cost of producing at these prices vs waiting out by cutting back production. I also believe other producers will follow this lead, and soon if pricing doesn’t reverse. This is not a matter of forced shut-ins as has been the case with oil. This is purely a decision by a company to reduce output in an attempt to force a shift in the S/D balance, allowing prices to trend higher.

This has a limited bullish effect on the market still, since these wells can quickly be brought back online and go right back to producing natgas. So while this is exciting, and it is a real cut back in production, it will be limited. When pricing returns to a high enough level, production can ramp up quickly, keeping a ceiling on the price of regional and NYMEX NG pricing.

My position

UNG – 30% in with an average of $12.36 – placing an order to reduce again at $12.95

I remain optimistic that pricing will creep up ever so slightly more and I will exit soon this go around. I believe I would like to reduce again at $13ish for UNG. This may be reaching, but any more news of producers cutting back in the Appalachia area, will be all that is needed. $2 Natgas is too cheap for producers; Dry gas has already begun to budge. May we see more cuts to come. I’ll go ahead with an order to sell down to 10% UNG holding at $12.95 now. Let’s see what happens. Good luck


Morning Update – May 18, 2020

The news of the week for me is a revision to production. HFIR shared this image on twitter over the weekend.

Daily NG production 2016 to now by HFIR

I say this is a revision, because I can’t see production physically dropping this fast in just a few days. I could be wrong, this could be a sudden change from the wells that have shut in production. Either way, it is what it is.

US Daily Industrial Demand by HFIR on April 28, 2020
US Daily Exports to Mexico byHFIR on April 28, 2020
US Daily Power burn by HFIR on April 28, 2020
Daily LNG Export pipeflow at

I’ve shared a few charts here to do a short comparison. I know this isn’t the best shared data, but I’m not allowed to share proprietary info without permission. This is the most recent of free data I found. It is enough to show a few comparisons to last year. Lets assume for a moment demand is very close to last 2019 demand numbers. Res/comm has been above 2019 due to high HDDs, Industrial dropped below, exports are near 2019 numbers, so it balances out for the most part.

I’m having a ton of trouble this morning with getting this post to work. This server seems to be having a lot of trouble. I’m going to publish this and slowly add to the post as the server allows.

US Total gas demand by BlueGold Research

So the easiest way to look at this is… to look at this last chart and the first chart. Demand, right now, is close to 2019 numbers, and production just dropped below 2019 numbers.

Seems pretty simple now, the market has swung to an under supply. This should show up soon in EIA reports soon. Also I must keep in mind storage. Even if the market is under supplied by 1Bcf/day, that’s only 365Bcf to remove from storage, so it’s going to take at least 2-3Bcf/day of an under supplied market to just correct storage by the end of the year.

Even with the revision to production numbers, this shift in the supply/demand balance must show up on EIA storage reports (which could take a couple weeks to show up). Storage is above the norm, and will keep a lid on pricing for now. With the recent revision in production, a little more hope will be given to bull mentality and prices may slowly trend up (as long as an under supplied market is still noticeable). Summer weather will have a stronger effect on pricing right now. Since the market is much more balanced, CDDs will have more influence to tip the S/D scale more toward an under of over supply.

My position

UNG – 40% in with an average of $12.36 – placing a limit to sell down to 30% at $12.36 today.

I’m optimistic UNG could get to $13 – $13.5, this week even. I’m not counting on much more than that just yet. I am a bit on the fence about whether I should sell out at $13.5 or hang on to a little now that production has dropped. I may hang on to 10% vs previous 25-30% holdings in UNG, hoping for a pop in the price. There is plenty of time to decide, and I will have more confidence in my decision as the week goes on. For now I just have a limit to sell 10% of my funds at break even of $12.36 in UNG. I’m not interested in buying unless pricing gets to new lows. Good Luck


Morning Update – May 15, 2020

I can’t help but get the feeling Saudi tankers are in play here. 50MM barrels of oil, to be unloaded in the US. I don’t know how much more than is normally sitting offshore, but it is being made to sound like a lot. Probably because it’s a lot. So this is bullish because it puts pressure again on oil storage, causing a surplus to continue to exist and suppressing oil prices (some anyway) and putting pressure on oil production. All that goes back, any influence to suppress oil, will at least be perceived to suppress natgas. That’s my story but it sounds a bit thin…

Natgas production still appears to be holding the the trend of declining output. It’s really quite fast to drop 5Bcf in just 6 months. Of course it seems 3Bcf (over the last 1.5 months) could be related to the pandemic. I’m seeing production cuts still lasting, but also hear of permits in Texas have been increasing for drilling. Some Whuflu related cuts will most likely come back online, but if prices continue to fail due to LNG cuts, the market will find other places to cut production. All the while keeping prices down, volatility up, and options premiums a little to a lot higher. That being said, I’ll continue to reduce my holdings when reaching my break even price, only taking profits on smaller portions, but staying ahead of price destruction.

My position

UNG – 40% in with an average of $12.36

I had been wanting to hold 25%-30% of UNG for a turn around in the NG market, but I’m letting go of that for now. I like to think I was mostly accurate about the pandemic and LNG exports falling. I will always feel like I need more time and more data to a better job of trading. Either way, I’ll take profits and reduce to 0 holdings more quickly this time around. I’m placing a limit order to reduce one of my 10% layers at my break even price of $12.36. The market may just be giving back because of the strong move this week. The oil tanker thing just stood out this morning. We are still waiting to see how LNG exports shape up. From a technical standpoint, I’d say prices have bounced, but it’s looking to consolidate heading into next week. So no reason to make a move yet. I’ll keep my 1 limit to reduce if UNG can just happen to get to $12.36. As for Oil. I’m interested in selling that DBO covered call, but it seems I’ll have to start another account. I’ll check on that, but am in no hurry to change things around just to sell a covered call. I can place that order in my other account again. good luck


Morning Update – May 14, 2020

To help with the idea of how much is 30 loads of LNG

US LNG export volume and number of loads per month at

This is the total number of loads and how much gas was loaded each month onto boats.

I don’t really have time to add to this, but LNG is/has now been officially highlighted and maybe the main reason for the recent fall in NG prices. I’ve also been giving credit to the bounce in oil. Everyone gets all excited that oil is crashing and it’s going to drag down production, and associated gas is going to go down with oil. That’s all hype until it happens. I’ve heard a lot about oil companies cutting back, but I haven’t heard numbers for associated gas and it’s not something that is easy to organize all these numbers. I’m just saying, everyone got a little too excited, even I go hooked on that idea for a bit. Now everyone is getting excited about oil bouncing back and gas is going to suffer; supplies will be back up and so on. This may not be so true either. Oil demand is recovering, but the damage has been done; oil production may bounce back some, but future investments in drilling have been shot in the food for both oil and gas. Gas has been a longer time coming because prices for natgas have been suppressed for quite some time. US demand is already showing signs of life; the problem circles back around to LNG exports.

So I have two thoughts on all this. US demand will probably recover quick, if it has not already (mainly because it never got hit that hard to start with). I don’t think the immediate supply cuts are enough to offset the cuts in LNG exports, this causes the market to clearly go back to being over supplied. Also, storage is already near 400Bcf over supplied as it is (vs 5 year average). This is the deciding factor. I seem to lose track of this from time to time. All roads lead to storage and how well the market is managing storage. We have plenty of gas, and plenty more coming in than going out. Also it is build season, so if the market appears to be building faster than normal and storage is far over filled already… you get this idea?

The LNG factor is the hinge pin. As soon as we believe LNG will get back to some normality, and the exports will stop declining, the market will decide to balance out. Depending on storage figures are compared to the 5 year average at that time, will determine if pricing holds where it is, bounces around, or decides to trend up. So, as usual, I started going long too soon, natgas is not at risk like oil as of yet. There is still enough demand, prices don’t appear to be wanting to go to zero or negative. I will remain cautiously long.

My position

UNG – 40% in with an average of $12.36

I will not buy before the EIA report and my last purchase price was $11.26. So I’m in not rush to layer on. I’m content with my average. Be patient. Good luck


The world needs gas, LNG demand will need some time. Someone on twitter mentioned gas storage is full in other parts of the globe. Just like in the US, storage will need to be used up a bit, and our dealing with the pandemic will determine how soon. Right now it is too soon to know. again, Be Patient….

Morning Update – May 13, 2020

I had gotten billed for some hosting for another website my wife and I manage, I migrated that site to the same hosting as this site to save some money. While on text with the tech, he hooked me up with some changes to make this site run a little safer? I feel at least up to par now.

Before I get a call; it seems gas is testing lows. Without more major melt downs in LNG, I don’t think we’ll see a break for new lows. Mother….. someone wants something already. I don’t get paid enough for this shit. Relied upon as if I’m an engineer without the benefits. I may be back. I’m interested in buying on more weakness, but be patient today.

I see a combination of LNG exports are still weak and looking to get worse. Production cuts are in, but maybe there are more to come. What’s bearish is that we don’t know how much will get cut and for how long. If Oil is going to bounce back, and LNG exports are going to continue to weaken, this leaves a larger than normal unknown amount of gas balance. As in we don’t know how much supply or demand will be cut or rebound going forward. It’s a bit more of a gamble at this point eh? Then there is weather. I’ve warned weather is turning to be more the norm. Now we will have a true picture of demand without extreme HDDs in play. This is bearish on the surface because demand will drop. Seems I’ve also heard cash price has fallen, this will help drag prices for June lower. So it may take more to pull out with a gain.

holding 30% of funds in UNG with an average of $12.73

gotta go. Be Patient today. good luck


Morning Update – May 12, 2020

I cannot sit down for 5 mins, another call already

holding the same UNG, I’m interested in adding. I need to look things over first.

I’ve added to UNG with roughly 10% of my funds at $11.88

I’m now holding UNG with 30% of my funds with an average of $12.73. It’s been a busy day. It was a good day to wait to add.


Trying to convert my account to margin trading. clicked on it. and…..

that’s it. I guess I can’t trade margin without applying to a new account. I don’t feel like this crap right now. I’ll check back when I’m in a better mood.

Morning Update – May 11, 2020

Theme parks, movie theatres, fast food, larger social event, and maybe bowling – all above my threshold of risk vs reward. I cannot imagine going to a theme park right now… All these people lined up to get food, served by some kid. Might as well line up for hugs.

I have a couple guys I’m supposed to baby sit this week at work… *blank stare*

My positions:

UNG – 20% in with an average of $13.15

Friday, right before market close, I bought more UNG with 10% of funds. I think it was a bit rushed, but it is UNG. Despite LNG weaknesses, natgas prices are super low by most views. In the next couple of weeks, US temperatures will be close to the norm HDD/CDD wise. This will give a more true picture of any real weakness in demand. I t appears industrial is already recovering with many states lifting work restrictions. The only way I know to play this trade, is based on low prices. Pricing is so weak, much more and gas producers are going to be crushed. Prices are so low, there is no competing pricing, everyone is losing. So stay on the long side and trade in small amounts since moves are relatively big. Unless UNG makes another large move up/down, I’ll be waiting today. I would be interested in buying at $12, or reducing at $14

I am still awaiting funds to clear my account to trade covered calls. It may be late this week.

Good luck