Friday, October 2, 2009

Natural Gas Inventories at Record High: Overflow in 4.1 Weeks

Natural gas inventories were reported showing another injection, this time +64Bcf, slightly over expectations. Storage is at a record high, as we have been predicting and showing.

With no hurricanes in sight (see map below), and in should season when no heating and no air conditioning demand, injections can continue further. At the current rate, storage overflow will occur in 4.1 weeks. If this happens, spot prices will crash (not necessarily futures, but very bad news nevertheless)

Storage is 15.8% higher than last year. The mathematical derivative (slope) is showing no sign of changing, and it is still steeper than last year, and than the 5-year averages:


As a result of today's numbers, UNG took a big tumble.

Please remind me of showing the straddles for next week, which will be extremely attractive.

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crk said...

Can you please post the next week's straddle play for UNG

The Shocked Investor said...

crk, it's too early. Currently, as of 3:25PM, UNG is at 11.40, in between strikes. The strangle is:

Stock: UNG Current price: $11.4
Call Strike: $12 Call Premium: $0.25
Put Strike: $11 Put Premium: $0.35
Number of calls: 40 Number of puts: 29
Call$ invested: $1000.00 Put$ invested: $1015.00
Straddle Cost: $0.60 Dollar Cost: $2015.00
Comments: OCT
Max move req. to upside: 9.68% Max move req. to downside: -9.60%

That's a 10% move, it's possible but I don't quite like it.

Tuesday or Wednesday we should revisit.

crk said...

Ok. Will wait then.

How about the NOV straddles?

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