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Energies


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Energies

  #71 (permalink)
NotKenGriffin
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SMCJB View Post
My thoughts were inline with yours. I was talking to a friend in the last few days that works on a big energy trading desk and they thought very differently. Said while all the financial trades love it, all the physical traders hate it. Worried that demand destruction will exceed supply reductions and that a large amount of LNG exports no longer make financial sense.



Is it an institutional sales desk?

LNG exports are 5 bcfd and should mostly be take-or-pay, so I wonder how much realistically we’d lose from that.

Associated is 15-20 bcfd - have you seen any forecasts for how much that decreases at current rig count levels? If some regions are still flaring I think that may decrease less than people think as the producers try and squeeze out all $$.

Power burns should be down too so it seems like fundamentals are pulling NG in multiple directions. It may still just stay a weather play when all is said and done.


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  #72 (permalink)
 myrrdin 
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myrrdin View Post

My only position in the energies is some NGU futures. I expect a reduction of the production of natural gas in the US, as oil production is reduced. And - perhaps - we will see more exports to China and a hot summer. In my opinion, the medium term downside risk is limited.

Best regards, Myrrdin

After taking profit - the NGU future was as high as $ 2.5 short time ago - I am long this future again. Ma target is again $ 2.5 .

Best regards, Myrrdin

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  #73 (permalink)
 
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 SMCJB 
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NotKenGriffin View Post
Is it an institutional sales desk?

LNG exports are 5 bcfd and should mostly be take-or-pay, so I wonder how much realistically we’d lose from that.

Associated is 15-20 bcfd - have you seen any forecasts for how much that decreases at current rig count levels? If some regions are still flaring I think that may decrease less than people think as the producers try and squeeze out all $$.

Power burns should be down too so it seems like fundamentals are pulling NG in multiple directions. It may still just stay a weather play when all is said and done.

Meant to reply to this.

I don't know what you classify as an institutional sales desk? If you mean a bank, no, who cares what they think. If the Goldman Sales guy was telling me what Aron was doing and not what he though I might be interested. If you mean big hedge fund, maybe. (Never understand what people mean when they refer to institutional clients in the energy industry. The big energy traders back in the day, were much bigger than any institution!

Not trying to be retro trader here - I really have no idea where gas is going - but LNG exports definitely seem to be going south! Plus everybody now things production is coming back again. Who the hell knows!


myrrdin View Post
After taking profit - the NGU future was as high as $ 2.5 short time ago - I am long this future again. Ma target is again $ 2.5 .

Best regards, Myrrdin

Free $100, gotta bet on red or black? Gas goes lower not higher.

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  #74 (permalink)
 
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 Schnook 
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Back in Feb and March the CTAs and large speculators were massively short gas. It was a large enough position asymmetry to make me bullish for a short-covering rally, but that trade kinda fizzled out and seems to be done now. Per the COT data, Managed Money covered a 300,000+ lot short position in March and April, but only barely moved prices back up to the low 2 handles - briefly - because demand destruction apparently left plenty of net supply available to fill their covering bid. Now positions are back to flat, and so am I.

If anyone has a strong opinion one way or another I'd love to hear it.

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  #75 (permalink)
 myrrdin 
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SMCJB View Post

Free $100, gotta bet on red or black? Gas goes lower not higher.

Thank you for your advice. I will be careful.

Best regards, Myrrdin

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  #76 (permalink)
 
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 SMCJB 
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myrrdin View Post
Thank you for your advice. I will be careful.

Best regards, Myrrdin

I wouldn't put any weight into my thoughts. I have zero conviction in them.

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  #77 (permalink)
NotKenGriffin
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SMCJB View Post
I don't know what you classify as an institutional sales desk? If you mean a bank, no, who cares what they think. If the Goldman Sales guy was telling me what Aron was doing and not what he though I might be interested. If you mean big hedge fund, maybe. (Never understand what people mean when they refer to institutional clients in the energy industry. The big energy traders back in the day, were much bigger than any institution!

It usually refers to who they’re selling to and not who they work for. Typically institutional sales roles are cross-asset functions b/c of what you’ve described in terms of institutional trading size (e.g. have to cover for markets since their client’s trades are smaller) as well as the fact that their clients often put on complex multi-commodity positions. Because of this, they’re often less in-the-know than their desk-specific sales counterparts that cover market and region specific consumer/producer clients.


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  #78 (permalink)
 myrrdin 
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SMCJB View Post
I wouldn't put any weight into my thoughts. I have zero conviction in them.

Being careful never is wrong ...

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  #79 (permalink)
 myrrdin 
Linz Austria
 
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An interesting seasonal trade at this time of the year is the RB-HO.

MRCI recommends the March contracts, which were profitable between middle of December and Christmas in each of the most recent 15 years. I decided to enter the May contracts to be able to take profits from an improving situation around COVID19. The 15 year pattern for these contracts is moving upwards constantly until expiry.

In my account, these spreads are a hedge for my speculative NGH long position, which I bought recently. Cold snap will help NG, whereas it will be a problem for RB-HO.

The spreads could be bought just above 0 in recent days, I intend to begin profit taking around 10 c.

Best regards, Myrrdin

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Last Updated on December 11, 2020


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