Morning Thoughts – Oldinvestor

In the near term LNG is recovering while production is struggling. These two categories are so huge right now, what else is there? Storage is still a factor. South Central non salt injected 7Bcf last week. This week will be more, and the next week will return to something like last week. So the past becomes the future? hmm… I’m doubled down on UNL. I exited UNG too soon, but look at SLB… UNG could have done the same. I’m happy with where I’m holding. I’ll keep my positions the same today, unless UNG goes to $9.5 which is damn near impossible.

That’s it for me.

Positions as of pre market 9/25/20

UNL is going to give me 9.5 at some point, but not rush. Also, SLB should turn things around. Life for the energy service industry is rough right now. I’m content with waiting a bit on SLB. I hope your weekend is fantastic.

Oldinvestor

Morning Thoughts – Oldinvestor

My mind in being swallowed up with wiring harnesses and electronics for automotive gauges… But here’s the rundown. No-f’ing-one knows which way is up right now for natgas. People are getting stopped out left and right, on both sides. I’m more upset about all my equities going to shit yesterday. Luckily I’m still holding LABU short and that covered the whole slaughterfest… Geezus…

Anyway, Production keeps dropping. LNG is sucking but Sabine showing some life. Storage is now certainly livening up the entire situation. No doubt it’s time to be in UNL, because right now production is getting crushed. Storage will eventually go back to the norm, and production will be caught with their pants down. Meaning the longer this goes one, the more likely production will not recover enough to keep up with a lack in storage in the following 18-24 months. Production is quick to come online, but there are limits, and the boundaries will be tested over the next two years. To take a step back from this though; if pricing gets too wild in the US, LNG will suffer and correct the price. But right now my money is shifting to UNL. I’m going to add to my position today. I will double what I have in my Webull account.

I almost forgot, I exited UNG yesterday. With gas moving wild in both directions, a covered call is not a good choice for an options trade. UNL is for the long term, and the long term is better on the long side. My SLB position is sucking right now as well, but I’m willing to let the call expire, collect the premium and wait it out for a while.

Positions and P/L premarket 9/24/20

SLB has gotten too far out of range to roll out/down so I’ll wait to see if the underlying price will come back to something manageable. I have a couple weeks before I need to think too much about SLB.

Doubling up on UNL today. Good Luck

Oldinvestor

Morning Thoughts – Oldinvestor

Daily LNG export demand on pipelines at RonHenergy.com

Ouch! I saw some news of flooding around Houston. I’m guessing the Tropical Strom/Hurricane Beta may have caused this disruption with Sabine Pass and Freeport. Cameron has now been offline for almost a month. The chances of prompt pricing panic I guess are once again considered a possibility for many more than myself. Production has fallen back to May lows. I don’t know what regions are doing what, it almost doesn’t matter. If all areas of storage are filling as quickly and storage is already 90% of capacity, it’s simply a problem for everyone, not use South Central. Keep in mind, I feel like I’m speculating more than usual here.

I’m glad I made gains on BOIL and will be ready if the market does finally pop and move higher. This lower for longer idea may really take its toll on the market next year or even into 2022. If you want a discounted contract, summer of 2022 contracts are pretty cheap, around $2.5/MMbtu. I’ve got my long term play, UNL. I’m giving the market a little more time to see if it will keep up this pressure on pricing. Prices are probably repsonding to what’s happening now, so next week’s EIA report will not be such a surprise. If LNG doesn’t get its shit together again, and more quickly now, Henry Hub pricing is about to get a lot more interesting. Currently $1.45 or something? haha

I’m just going to continue to watch with my current positions. I’ve found another typo on my spreadsheet. I had SLB expiration for 9/25/20. I’ve corrected this to 10/09/20.

My positions and P/L as of this morning, 9/23/20

All three of my positions are currently held in my Webull example account. I have roughly $2424 in this account and it’s approaching a record loss dollar-wise. With UNG and SLB covered calls, these are fairly big positions for this account. So the pain will be greater to the account when they are hurting. I’m just below my breakeven for each UNG and SLB, but I’m thinking in a few weeks, with some help from rolling forward the call, I’ll be at a gain there. UNG is anyone’s game with Gas getting hammered. I may loose my shirt on that one if storage gets as bad as I keep crying about. We’ll have to wait and see. I have gotten away from giving a % of my account that is invested in a particular ETF, since this is not quite easy to do when options are involved. If I took the full cash value of my break-evens. $1746 for SLB would be 70% of my funds in SLB. $1190 for UNG would be roughly 47% of my funds for UNG, and roughly 18% for UNL. This is 135%… Exactly. I’m using margin, and I’m about $800 away from a margin call if things get really bad. I don’t think UNG will get wiped out, but it’s going to be a horrible roll if I don’t do something about UNG.

Ok, so I just looked at rolling my UNG down and out, and that option seems to suck, but could be helpful to sustain a new breakeven. I will be sacrificing almost all my profit (potential profit), depending on how far down I roll the call. Expiration is still roughly 23 days out, so… maybe roll out to 10/30/20 and down to 12 strike from 13, gain roughly 50 cents, and give myself room to roll again if needed. I’m going to try this today. Something that I don’t like about Webull; the web based platform, anyway, will not trade a “covered call” as 1 trade. I have to buy the shares and sell the call after I buy the shares. To roll a contract out, I have to buy the call back, then sell a new call manually. Most brokers just allow it in 1 order. Anyway, look for me to roll out and down on UNG today to a strike of 12, and out to Oct 30, 2020 expiration. Good Luck

Oldinvestor

Morning Thoughts – Oldinvestor

Production is still lower, wow. Of course storage is going to get harder to fill, possibly forcing production to slow. But the big news would be Cove Point going down for routine maintenance. This shouldn’t have such an affect on my South Central theory since Cove Point is in the Northeast US. Sabine Pass and Freeport will though. The EIA report should improve drastically this week as compared to the 5 year average. Next week’s EIA report will once again shine the spotlight on South Central storage again.

I’m still in waiting.

My positions as of this morning

I didn’t realize until now, but Webull will update my position data live, even in pre-market. It makes little difference, but any pre-market changes are shown in my positions update. I don’t really know what’s up with the move this morning. Almost seems like everyone’s favorite contract vs Oct just went south? I’ll be here, holding and waiting. Good Luck

Oldinvestor

Morning Thoughts – Oldinvestor

So production got hit, then came back then hit again. I don’t know why or where. At this point it is hard to believe production would fall much further in the short term. By this, I mean quick and sharp losses, like wells were shut in. It could be maintenance somewhere that I don’t know about. LNG has also taken a hit at Sabine Pass and Freeport, but not before total exports reached 8 Bcf for a day.

Ron H passed on to everyone on Twitter yesterday that Cameron may get power by the end of the month. That is awesome. I would imagine Entergy is having to re-wire and sink new poles in the ground. So natgas will will most likely take a bit longer to use up that extra storage. I got some UNL late last week in my account that I don’t share, but I’m in no rush to add with the current oversupply continuing and the erratic conditions with LNG exports.

As for my positions. I will remain unchanged. I could add to UNL, but there is this small chance prices could fall a little further. For someone just getting in, a good trade right now, I would think, is Long UNL/Short UNG, with a lot of weight on UNL. Also I wouldn’t short UNG unless it there was no interest fees to short it. $0.53 in contango from X to Z contract. That’s roughly 16% or $2 lost to contango in UNG.

My positions and P/L as of market close 9/18/20

I’ll be holding to see what happens. Everything has been turned upside down in natgas and it is certainly hard to sift through at the rate I do lately. No need in being in a rush; I want to see how the market does this week some before I choose to add to UNL. That may be my next move. Good Luck

Oldinvestor

Morning Thoughts – Oldinvestor

Natgas prices at Barchart.com click the image to go to the same list for free

Forward natgas pricing is taking a beating. Forward, meaning the earlier contracts to expire. My South Central theory just got a big boost this week.

Storage by region at EIA.gov click the image to go to their site

We can see that South Central Non-salt is at 92% of capacity. This is more full than storage gets most years at any point throughout the year. Other areas of the country are also not far behind. Many more weeks such as this and there would literally be no place to put natural gas.

Entergy.com outage map for Louisiana, circled is area for Cameron LNG export facility

Cameron is still without power. I can imagine someone with big data is sending someone to go drive around the area to asses what is going on. To think I was counting on there being outages here and there, now that LNG exports have grown to this size. I wasn’t counting on this. Good thing I’ve been so paranoid of South Central storage since it was brought to my attention.

Granted, South Central non-salt will most likely (like 99% chance) will not reach maximum capacity. But… it is the threat that will drive prompt pricing off a cliff. All the more reason to be cautious going long. I went long on UNG a bit too soon.

My current positions as of market close 9/17/20

I’m still big on UNL, I’ll continue to hold this until next year possibly. Maybe it will be the first long term gain I’ve recorded in 20 years. SLB is doing well and could possibly keep my account alive while UNG suffers.

So I’m out of BOIL! wow, I didn’t expect this… I did not cover these trades because they were at a profit. I covered because the market took a direction that will set me up for a better entry. When Cameron comes back online and prompt pricing is no longer under attack from storage scares, I’ll then give it some more time to come up from recently developing lows and wait for a point at which BOIL is starting to get deeper into the Hard to borrow category. I’ve learned there is a much better deal to be had, while still being able to get shares of BOIL to short. Remember I’m shorting BOIL with deep ITM covered puts just so I can get the shares shorted before they become impossible to borrow. This trade has little to do with making money on the covered puts. It’s a big investment that may take months to survive; but the payout could be 50% of the investment. I’ll take 50% gains ROI in less than a year. The market still must move in the direction I need to pull it off, so it may be a long wait for this trade to actually work. Right now I’m just happy to be where I’m at with what I’ve shared. I will be adding to UNL today in my bigger account that I normally do not share. Also, now that I’ve added money to my example account to convert it to a margin account, my UNL position is closer to 20% of the account value. The UNG covered call is roughly 50% and the SLB covered call is roughly 72% of the account. I’m on margin, so I’m beyond 100% of my cash value, I must be careful right now in this account. It’s more about protecting my ASSets. I hope everyone is a little more clear that was completely lost in Natgas. And I hope I’m not completely off base. I hope everyone has a great weekend.

Oldinvestor

Morning Thoughts – Oldinvestor

Gas is lower and I”m not quite sure why. My best guess is Lack of LNG demand with Cameron being down and idea that they will continue to be down. Also Oil prices are getting a shock, which could spur a little growth in production. Though I keep hearing how OPEC and non-OPEC need to cut? and oil demand just isn’t there? I don’t like Oil and am not up to date with oil. I just know that there was a huge surprise draw on the EIA oil report yesterday and it spurred pricing. If oil prices rise, so will production and so will the hard hit associated gas. This is kind of a long shot for me. I don’t put a lot of emphasis on this idea. It could be that the market is actually worried about South Central storage now, and lack of LNG right now when it matters most. Even in early draw season, South Central could continue to build storage because temperatures will be mild during early winter.

I’m getting called away again

I’m dumping my BOIL covered puts. Because the market is going further than I expected. I am at a profit (enough to at least cover the interest paid for the BOIL short). So I’m dumping them and I’ll risk not getting short and pick them up again later. My other positions remain the same.

I should be back, we’ll see

Morning Thoughts – Oldinvestor

I’m going to repeat myself a few times this week, starting now. LNG has recovered more than production; great. Production continues to show its unwillingness to increase output; possibly some due to low oil prices. Since I don’t have access to live regional pipe-flows or regional storage estimates, I’m waiting for next weeks EIA report. LNG has been strong coming into this week. And the weather has gotten closer to average lately.

My point is this: in an effort to proved to myself that South Central isn’t going to reach capacity. I think next week’s EIA report could be one of the more important reports to me for South Central storage. I’m slowly letting go of the theory, but I still need strong evidence. If South Central Non Salt is at 90% capacity and this is 900Bcf, then 1000Bcf would be full. this is 100Bcf to get to that point. Last week was a build of 13 but LNG was very weak. There are 9 weeks left to report by EIA before EOS (End of Season/Storage). 13*9=117. So with the increase in LNG demand of say 2-3Bcf and potential of an additional 1-2Bcf more in LNG demand, this could swallow 15-60Bcf/week. This is a big range on LNG demand, and will it all come from South Central? I don’t think so but it is still too close for comfort in my opinion. This is why I’m putting a lot of emphasis on this theory still.

Weekly South Central Non-salt Storage at Ronhenergy.com

Again, power burn will be decreasing while LNG exports are increasing, but if production was hardest hit in Texas, then I believe bulls should have nothing to worry about. I saw a headline that said Cameron LNG could be down until November? I doubt it. If anything, they will be partially down. I’m sure they are at least inspecting and taking note of what needs repaired, if anything. They can still bring in generators to do any repair work. They simply need power to run chillers and NG compressors. And maybe that takes longer than I know to prime those systems. Either way this is a factor that is important to consider.

Not to latch onto this south central theory, it is just getting to the do or die point.

OH! So I decided to sell a covered call against UNG. Maybe I should have just bought UNG, but the premium looks good enough to me and I’m not certain there is a lot of strength in NG prices right now. So I have maxed my account out with SLB and UNG covered calls and still holding UNL with 50% of my original $1000 investment funds.

I’ll update my positions with the following spreadsheet screenshot. Covered puts in red, Covered calls in blue, and UNL shares long.

P/L on all positions as of market close 9/15/20

I’m going to hold here and see what happens. I’m a bit nervous about BOIL, but I just keep in mind this is a long term trade and I want it to go against me in order to short it directly from a higher point. Sometimes a strategy just needs to be given time to work. Good Luck

Oldinvestor

Morning Thoughts – Oldinvestor

Cameron is still without power. This is incredible. Looking at Entergy.com power outage website, it should be soon. The Cameron facility looks to be part of the last area to get power restored. The natgas picture is still the same. I am leaning toward a bullish bounce, and believe it will be amplified with news of Cameron coming back online and tankers moving in their direction. It should be a few days from now. The LNG liquefaction plant itself will probably have to undergo testing before they can start exporting again. I have no idea how long this will take. If I were to just take a shot, I would say be week end they will be exporting or at least have a statement of when they expect to do so.

I don’t have much to add. I should be adding long here, but I’m content with what I’m holding.

UNL – 50% of my max comfort in from $7.4

BOIL covered puts and SLB covered call

P/L from Covered positions as of market close 9/14/20

I hadn’t thought about it, but I could just put UNL on my sheet there. durrr

I’ve gotta go, good luck

Oldinvestor

Morning Thoughts – Oldinvestor

LNG is back above 7Bcf/d thanks to Sabine Pass nearing it’s record consumption of around 4Bcf/d. Production is also super bullish; continued weakness with no significant signs of increasing. I have a feeling producers are waiting. They all know it’s a matter of time… If they can just hold out another few months for storage to start going the other way. LNG is doing their part, now it is just a waiting game before prices will be at a point at which they cannot fall but so far, giving producers the signal to increase. The gas is there, just need a new round of greed to tell frac crews to get after it.

On the bearish side of things. I’ve not seen this many tropical disturbances at once on the map. This does not mean anything, as I am not a weather expert. It is just that time of year and it looks wild.

Home page of National Hurricane Center https://www.nhc.noaa.gov/

And of course, mostly do to the lack of LNG two weeks ago, South Central Storage has spiked.

Weekly South Central Storage vs South Central 5 year average at RonHenergy.com

This just might have some effect over prices continuing to fall last week. This puts South Central Non-Salt at 90% capacity, according to the EIA. https://www.eia.gov/naturalgas/storage/dashboard/

On this same web page, South Central temperatures have been above normal in recent history. So power burn is not lacking. We will most likely see an improvement to Non-Salt storage in this week’s EIA report and from here on. It is still threatening to be at 90% capacity, so I’ll still be watching this weekly until November.

My positions

UNL – 50% in with an average of $7.4 – holding

SLB and BOIL

SLB and BOIL covered trades as of market close 9/11/20

My SLB expiration date is 9/25/20. I’ll enter that now. Looks like I’m doing quite well right now. Natgas is up this morning, so BOIL will start working against me again. This is good though. I need BOIL to get higher, just not skyrocket. SLB is being influenced by oil, so that isn’t helping, but should stay pretty flat. Some noise needs to happen so premiums will be worth selling. That’s it for me. I’m happy to hold where I am. Good Luck

Oldinvestor