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

Morning Thoughts – Oldinvestor

Wow, SLB had like a perfect down day yesterday. 1 hr candles look like a Heikin Ashi Chart. With LNG ramping up and prices stalling, I’m missing something. I’ve got enough data to know there is something strange here. It could be weather related, but I’d rather go with storage. It is also possible that there was the expectation that the Cameron export facility would be up and running and isn’t. I know they had power outages in that area and is the cause for Cameron being down to this point.

I don’t have much to say today; I do think the market will find support fairly soon and LNG will start showing strong demand even with seasonal declines in power burn. Maybe once Cameron is online. One other thing could be that it’s more about the number of boats that are headed to the US or lack of boats headed to the US. Cameron is down and those boats could be diverted this time to another facility, such as one of Cheniere Energy’s ports. This may be very unlikely, but in this situation, I’m sure a lot of arrangements could be made since no one is at capacity and those tankers cost someone a lot of money each day to sit still or to move across the water regardless.

My point in all that is the bit players in the natgas market may see that there isn’t enough global demand yet in LNG, and we are seeing a surge in demand at the US export facilities right now, but we don’t know what the demand picture looks like a month or two from now. Big players probably do know. Samir Madani might know at tankertrakers.com. I will have to ask Samir about this. I don’t know if it worth his efforts to track LNG tankers.

UNL – 50% in with an average of $7.4

BOIL/SLB covered options

BOIL covered puts and SLB covered calls

Oh, and SLB is down on oil. I’ve got a 30 day wait anyway. I won’t be making any changes to my positions. Have a good weekend.

Oldinvestor

Morning Thoughts – Oldinvestor

My mind is being flooded with stepper motors design, driver chips, pcb boards, mounting techniques, who wants what and how to put it all together and who am I going to have to get to help me program it all.

I will be honest, I feel myself loosing a grip on Natgas. I’m focused on building something that NO ONE is building. There are companies willing to chart $1500 and up to “retrofit”, but literally no one is offering a kit to replace a mechanical speedometer inside factory gauge clusters with an electronic one for less that $500.

I don’t have updated data right now anyway. RonH has posted the latest LNG pipeflows

http://ronhenergy.com/lng–pipeline.html

Holy crap thats a big move. Almost 6.5Bcf/d now in LNG demand. The US natgas market is certainly undersupplied at this moment. Well in relation to the 5 year average anyway. I think this may seal the deal so that South Central storage doesn’t get threatened with too much storage. Today’s EIA number should reflect a build for South Central. Also, power burn will start to fall in the South and this will offset the increases in LNG demand. And… South Central storage is almost as full right now as it is normally at EOS, so there is still a chance, because South Central will build more on lack of Power burn demand vs lack of LNG demand. I know it sounds like I’m milking this South Central storage thing. I’m really not, I’m quite bullish on the overall future of Natgas, hence the UNL and now SLB positions. Moving on.

So I’ve been a bit concerned again about my BOIL covered puts, mostly the 70 strike for December expiration. But if BOIL gets to $70/share and I think it’s going to keep going, I can choose to roll out the 70 to say March… barf… and wait it out a little longer… barf.

I’m not ready to make any moves. This is just paranoia brought on by LNG exports…

My positoins

UNL – 50% of max comfort invested from $7.4 – holding

SLB covered call and BOIL covered puts

BOIL covered puts and SLB covered call as of market close 9/9/20

I know that SLB follows oil more than natgas, so I’m risking more based on oil here, but I just like SLB and the price of SLB at this point in time. It’s EIA day today. Good luck

Oldinvestor

Morning Thoughts – Oldinvestor

LNG demand is at a new 3 month high. I wouldn’t mind buying some more UNL. What I have my eye on is CQP (Cheniere Energy). They are the biggest LNG exporter, and they appear to know what they hell they are doing. They’ve capitalized on their contracts that require their long term buyers to keep them afloat amidst the Whuflu panic. If CQP continues to be half as smart as they’ve been thus far, they should be a good long term buy.

CQP daily chart at Webull
LNG exports daily at RonHenergy.com

RSI is priming up for what may be a turn. I would say it’s a bit too soon for a technical comeback for CQP. For good reason, I shouldn’t rush into this trade. RSI is showing oversold, but CQP had dropped below 200MA and is still going. The last thing, I didn’t draw is a slightly up-sloping trend line from May to now that the price is about to reach for potential support. I would think CQP is about to reach support and I plan to keep an eye on this.

One more thing about Cheniere is they have two symbols associated with their company. LNG is the other symbol. LNG is for Cheniere Eneregy Inc. and CQP is for Cheniere Energy Partners LP. Both are listed on the NYSE. CQP has an annual dividend yield right now of almost 7.5%, and LNG has nothing.

Webull is telling me that CQP can only be liquidated, new positions cannot be taken. I don’t know what this is about. I have not heard anything that would deter me from buying CQP. Even if they did delist, I could just switch to LNG, but I would rather hold CQP for the high rate dividend. I’ll try again later, when the market is open. Maybe I’ll just add to UNL instead.

UNL – 50% holdings for now from $7.4

BOIL covered puts have improved drastically

Covered puts as of market close 9/8/20

I really am lost as for where the market is headed. It seems production continues to be weak and LNG is now back to growing, and fast. It may be a gift to go long, or I’m missing something. And I have a call. I’ll be looking to by some CQP, and maybe something with options later. Check back Good Luck

Oldinvestor

Update:

I’ve entered a covered call in SLB in Webull. Webull recently allows cash accounts to be converted to margin accounts. So I upped my amount in this account to meet the minimum of $2000 to trade on margin. I am approved to sell covered calls, and maybe covered puts. I can short equities, so I might even short BOIL/KOLD/LABU/LABD or even UNG. This is very cool. I do not have enough money to short BOIL to do a a covered put, but i wouldn’t want to without major money to cover the position. Plus the interest rate is astronomical in Webull for shorting a Hard to Borrow stock/ETF. LIke 8.63% vs 3.75% in Schwab… Don’t short shares of BOIL in Webull, it’s not economical.

So the trade I went with today was buying 100 shares of SLB and selling 1 call ( 18.5Call for 10/9/20 expiration) I’ll put this on my list to track. And my reason for a covered call with SLB is I believe in SLB, but believe it will be a slow recovery for them. I”ve been selling covered calls against shares of SLB for a number of months now and it’s been working great. This will change eventually, but right now I believe it is still the correct path for SLB.

Morning Thoughts – Oldinvestor

Canadian imports are down over 2Bcf/d from recent highs. I’m not sure why this is… and LNG exports are now at/near 4Bcf/d

LNG export feed gas at RonHenergy.com

Sabine Pass hasn’t seen any boat traffic yet, but is starting to feed gas into their facility. They are surely testing and getting ready for their next load. Corpus Christi is pretty well at capacity. Cameron and Freeport are the two to watch to see if they will rise above 2Bcf/d at either of their facilities, as they have been expected to expand by this point. I haven’t read any news on this, but right now the goal is just to get back to previous highs with exports.

I don’t have anything else. Simply holding my positions steady

UNL – 50% in with an average of $7.4 – I may end up holding this position through 2021.

I know this year isn’t exactly like 2016, and we must get through winter first. but…

UNL from late 2015 to mid 2017 on daily chart at Webull

All I’m saying, is if the market uses up the gas surplus and continues to be under supplied in 2021, then we could have some slow grind higher as seen above. I’m simply holding until I see the market swing to over supplied again.

As for BOIL, that may have a long way to go. I looked at my account yesterday and saw they posted the interest for my BOIL position for August. Something like $27 for 100 shares short all month, and then I added 100 on 8/3/30 and 100 more 8/12/20. So the interest was somewhere between 2% and 3%. It can change daily and i don’t always keep track of it since the rate will stay low for now.

Covered puts P/L as of 9/4/20

I will be holding where I am for now. Currently no plans to change my holdings. Good luck

Oldinvestor

Morning Thoughts – Oldinvestor

Happy labor day – from work…

The market is still over supplied but is using the surplus a little at a time. Equity markets are closed today and I wouldn’t be changing anything right now anyway. Hope your weekend went well and you remember to take it easy.

Oldinvestor

Morning Thoughts – Oldinvestor

It won’t be long and LNG will be a 6Bcf/d+. Freeport and Corpus Christi are pushing exports higher and as soon as Sabine Pass and Cameron come back online, within a week or so, LNG will be consuming 6Bcf or more. There are boats at Corpus Christi and Freeport now and none still at Sabine Pass or Cameron.

Production is holding at 88Bcf/d and has only dipped below this for a moment. If drilling and completions continue to lag, this will slowly decline, but pricing is coming back slowly as well, and the cycle will start all over again. There never seems to be a lack of money to throw at this greedy industry. No doubt it’s going to take a while (maybe a year or more) to swing to an oversupplied market again, but it will happen.

One more consideration is Canada. There was a time the US imported more than 10Bcf/d from Canada. We currently import closer to 5Bcf/d, but this could get back to 10Bcf if there is a need and if there is pipeline capacity to support this.

Weather? What’s that? With all the drama with LNG and production, weather has taken a back seat. Also I saw that South Central storage didn’t had a draw in Salt, and a small build in non-salt, I believe. South Central may not make it to the 95% of capacity I was hoping to see before winter gets here. Production in the area is just too weak, even with LNG exports at lows.

UNL – 50% in from $7.4 and holding

BOIL covered puts – I rolled up on my 50 strike put for 3/19/21 expiration to 70 strike

BOIL covered puts as of 9/3/20
Covered Put P/L and changes

You can see I’m still short the same shares in BOIL from the same terrible prices; I simply rolled from a 50 strike to 70 strike and added $15.5 in premium to the trade to offset my protection. And I now have a potential to make $600 max gain vs the $1000 max gain before. But the price of BOIL just needs to get/stay below $70/share by March 19,2021. I feel much better about this trade. I hope to have the patience to sit on the trade through winter. This will not be quite the gain I was hoping for, but I may also get the opportunity to exit the put and hold the shares to ride back down for additional gains. I’ll cross that bridge when I get to it. Cheers to patience. May we all have a great weekend.

Oldinvestor

Morning Thoughts – Oldinvestor

LNG is still lagging. No boats at port at Sabine Pass or Cameron. It would appear there is only a boat at Corpus Christi at the moment. RonHenergy.com shows each LNG export facility right from the home page. Sabine Pass and Cameron are still not taking any gas into their plants. Any day now they will start back up. I’m thinking prices will only grind higher once this happens. Momentum is still in favor of bulls though it has slowed.

That’s all I have for today as nothing much has changed for me. I am still considering making a change to my BOIL 50 strike covered put, but I have not made any changes yet. I’ve got other positions keeping that account in great shape and I could withstand some disappointment from BOIL. 90 strike covered puts for December expiration are prices well now at near $500. The hard to borrow interest rate would have to be like 40% to wipe out that gain in the next 15 weeks. So as long as BOIL stays below 90 by mid December…

UNL – still 50% invested with an average of $7.4

BOIL covered puts

Covered puts P/L as of market close 9/2/20

I’m starting to feel the pain now with BOIL. I really need to hold out for BOIL to roll into NGF21.

Seasonality of NGX/F

There is a lot of contango from November to January contract. More than normal. So even if the market moves a little higher, BOIL is going to lose a lot of bull ground when it rolls to January contral. That is, as long as November doesn’t skyrocket in the next few weeks. This could happen in a similar way as last year. I’m really only a bit nervous about 50 strike put in BOIL. Lets look at it this way. Storage will still be high when the next roll happens for BOIL, this should keep pricing a little more suppressed. It is the reason Oct is still down at $2.52/MMbtu. There’s still plenty of gas, so why should October contract get any help. That being said, there are still two months before November expires and LNG exports are about to ramp up.

One might argue that this is already priced in. I say it isn’t fully priced in. I think this market has been so complacent, and trend following, it goes higher when LNG gets closer to exporting record numbers again. So what options do I have with my 50 strike put? I think I’ll try to roll the strike up to the max of a 70 strike for 3/19/21 expiration and my max profit will still be $600. I will sacrifice $400 in max profit, but add $20/share ( or $2000) to my protection. I like this trade off. Now it is a matter of what kind of premium I can trade out for. I may not get close to the $600 potential for max gain, but I’ll be ok with that. I’m more interested in the protection at this point, and i can always roll back down if/when I feel the need. I’ll be looking to roll my 50 strike put to 70 this morning. Also this has shown 12/18/20 expiration and it has been 3/19/21 this whole time. My other to puts are 12/18/20.

It’s EIA day. Good Luck

Oldinvestor

Morning Thoughts – Oldinvestor

Covered puts P/L as of market close 9/1/20

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

I’m showing a major decline in production (like almost 2bcf/d) for yesterday but many times this gets revised higher. hmmm

There is a slight increase in LNG, and there should be some news about Sabine Pass and Cameron facilities receiving boats as early as today.

That’s about all I’ve got; nothing will change for me unless BOIL gets on a tear. Good Luck

Oldinvestor

Morning Thoughts – Oldinvestor

Data points to the about the same story.

LNG has been hit, and will remain for another day it appears. Cameron is expecting loading to begin tomorrow 9/2/20. I’m not sure about Sabine Pass. Gulf of Mexico production is lacking still as well. I would expect that to recovery quickly, but I’m not sure of the status of the pipeline that is shut in to 4 platforms.

Life in the Natural Gas market is going to take a while to sort itself out. LNG is really going to screw with natgas a lot more than I think most of us realize. This thing with the Whuflu was a huge anomaly. LNG opens up the natgas market to many more, probably smaller, anomalies. It is steering the ship. This means you better have good instincts or a good supply of data on LNG and what is going on globally. This sucks. This was the whole reason I decided I didn’t have time for keeping up with Oil. Natural Gas was simple compared to now. barf!

I still stick with my plan. Stay short BOIL for decay and long UNL for long term rise in pricing that I believe is going to happen.

Fact remains, Storage wins eventually… This being said, to have the edge you have to pick up on what everyone thinks of what is and what is going to happen with storage. Near term, storage is over supplied. This winter will draw on storage as it always does, and will get a boost from LNG once LNG is back up to speed. Longer term will depend again on production. Gulf of Mexico and Texas were hardest hit by the decline.

Appalachia didn’t really drop from Whuflu, but has been on natural decline from a falling rig count. I haven’t looked lately, but right now I’d say DUCs are falling at a faster rate because of a drastic drop in rig count. The more an area produces, the more they have to continue at break neck speeds on the drilling side just to maintain break neck production. Technological improvements have been implemented and there isn’t much room left for increases in well efficiencies. So Appalachia might actually see a real dip in 2021 production, due to the level of production they must maintain and the fall in drilling over the last year or longer. Completions can still pick up on DUCs, but again, I’m almost certain EIA will show completions of DUCS aren’t making up for historic completions in Appalachia.

My point is…. Appalachia is going to be on the decline in production; I think it has already begun. And this will be a slow process for the area to recover from. NG will see new highs in production, but I plan to see prices slowly increase as they have slowly decreased throughout 2019. UNL. For an ETF trader, and you want to hold longer term, UNL.

Decay in BOIL will not beat near term rises in pricing, and it might get painful, but ultimately, for the effort (the amount of money required to make any) will be worth it. The % of decay is still horrendous for leveraged long sided NG ETFs. BOIL, being the last that I know of.

UNL – 50% in with an average $7.4

Speaking of pain

Covered put Profit/Loss as of market close 8/31/20

BOIL has me feeling the pain a little now. To the tune of $750 in this account. This winter could play havoc for me as usual. Keep South Central storage is your back pocket; if it doesn’t scare the market by the time LNG comes back in full force, I may adjust my 50 strike put or exit with a loss. I can always re-enter later. I know I said I set aside a lot of money for that trade, but there is no need to take a $5000 hit on my account when I could adjust and wait to see if there is a better opportunity. Good Luck

Oldinvestor