Natural Gas Price - August 28

[dan_s]

READ THIS: https://oilprice.com/Energy/Gas-Prices/ ... rease.html

Gas storage level used to have a lot more impact on natural gas prices. Ten years ago if storage was 100 Bcf below the 5 year average we'd see ngas at $4.00. Today there is a lot more supply AND more midstream assets that call get dry gas from Ohio an PA to the big eastern cities.

However, as the author points out in the article above, there is a lot more demand for U.S. gas.

[dave_n]

Interesting Dan, thank you. Given we are going into fall, there probably isn't much downside risk on natural gas in the near-term. I took a look at UNG options for April 2020. You can buy UNG $18 Call April 17, 2020 for $3.39. With UNG currently trading at $19.50, you basically are paying $1.88 in time value for the option. To reduce time value decay, you can sell weekly options against it... Right now Sept 6, 2019 $20 calls are selling for $.25. Selling the weekly options (with $18 strike you should have lots of room), you should be able to recoup the time value premium... Just saying this might be a good trade...

[dan_s]

Just remember that "traders" set the price of ngas. Today they believe the amount of gas in storage isn't important. A very cold start to winter could cause the "Paradigm Shift" needed to change a few minds and push gas prices higher before the winter heating season arrives.

Mexico wants more U.S. gas which could help the West Texas gas market, which is terrible today.