A few people have asked me why after 6 years being #bearish #natgas I’ve become vocally and aggressively #bullish - I know I give off the impression of a degenerate gambler but I do have a thesis underlying my view, I’ll do my best to share and summarise in the comments below…
1) despite common misconception, it’s not because of the weather… I’m not one to tweet about vortexes (you know who you are), crazy weather patterns, climate change or hurricanes. That’s all short term, I typically take a 9-12 month #natgas position absent of leverage…
2) it’s not to do with LNG, #freeportlng etc. - one can’t deny that has had an effect in 2022/23. But that’s exacerbated what was already in effect IMO. All upcoming projects have been priced in the contango curve (2024 earliest) and prod has reacted (drilling, DUC increase etc)
3) it’s not based on demand. Again one can’t deny GDP growth (or lack of) has an affect on demand and risk operators price in #recession risk like it’s the only thing that matters. But I look beyond the economic cycle #natgas - let’s look longer term….
4) look at increase in DUC wells, look at reduction in completion, supply side is already hinting this level is not economical long term. Current prices as this level will exacerbate prod curtailment and even shut in if it gets over supplied more…
5) then welcome the return of demand (2021 esq.), onboarding and pricing of new #lng , and the risk of a hot summer or cold winter, and you have heavy demand forces and weak supply forces acting all at once… that’s when the market all go in one direction and we see a bubble…
6) I’m patient, and will be rewarded. Those that join me will also be rewarded. Just trade smart, little to no leverage, keep plenty of free cash flow to cost average, and be ready for a once in a lifetime opportunity #natgas
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