Velocityshares 3X Inverse Natural Gas Etn (DGAZ)

[No-Quarter]

After reading my crystal ball this morning, I am expecting to see a BIG BGF number in next weeks report. Huge.

I am expecting to see a number between 110 and 120, which will drive NG down between 2.10 and 2.00 either shortly before the report by being priced in, or shortly after as a reaction to the report.

I expect next week sometime to be the end of the current down leg, and a base for the next leg up, as this years heating season begins.

For a peek into my crystal ball, look at the chart below, and the pull quote at the bottom.

JMHO


The below is a pull quote from here - http://www.celsiusenergy.net/p/daily-commentary.html

Looking ahead to next week, natural gas demand will fall as generally more seasonable temperatures overspread the major population centers, cutting both heating and cooling demand. As the Figure to the right shows, daily injections will rise from around +13 BCF/day on Saturday to as high as +18 BCF/day by Tuesday, a whopping 6 BCF/day bearish versus the 5-year average +12 BCF/day. For the full week of October 5-11, I am projecting an exceptionally bearish +119 BCF storage injection (to be reported Thursday 17 OCT), 38 BCF bearish versus the 5-year average. It would be the largest injection in the last 5 years by a whopping 26 BCF over the +93 BCF injections from 2014 and 2015. Should it verify, natural gas inventories would reach 3541 BCF with the long-standing storage deficit versus the 5-year average flipping to a +36 BCF storage surplus. Click HERE for more on next week's projected injection.

[researcher59]

EIA reports a build of 98 Bcf versus expectations for a build of 97 Bcf and the 5 year average of 89 Bcf.

NG drops from $2.26 to $2.24/mcf when the news hits.

Current storage is 3,415 Bcf which is 9 Bcf below the five-year average of 3,424 Bcf.

[No-Quarter]

The US Energy Admin will replace the previous weeks report with a count down timer for the new weeks report at approximately 8:30 EST each Thursday. When the count down timer reaches zero, at precisely 10:30 EST, your web page will automatically refresh with the new report.

http://ir.eia.gov/ngs/ngs.html

Best source of NG news I have found is here - http://www.celsiusenergy.net/
$25/mo subscription

Todays update -

(T)he slow bleed continue(s) in the natural gas sector. The front-month November 2019 fell 5 cents or 2.4% to settle at $2.23/MMBTU, the lowest settlement since August 27. The popular 3X ETF UGAZ continued its rollover, with 60% of funds having been transferred from the front-month to the December 2019 contract. That contract closed Wednesday at $2.44/MMBTU, a brutal 21 cent or 9.4% contango. Natural gas continues to be weighed down by the combined impact of record production, larger-than-expected EIA-reported storage injections, and a late October and early November outlook that has changed little and continues to look warmer-than-normal. Like oil, natural gas is trading at a steep undervaluation versus its Fair Price even with the recent transition to a storage surplus versus the 5-year average (-12% versus a Fair price of $2.56/MMBTU). However, thanks to the large contango and expected widening of the storage surplus, natural gas, unlike oil, quickly becomes overvalued by early November. It is for this reason that, despite an outsized 31% year-over-year decline, I would still not be surprised to see further downside in the sector with prices falling perhaps as low as $2.15/MMBTU, especially if the EIA continues to report larger-than-expected storage builds.

Speaking of which, the EIA will release its weekly Natural Gas Storage Report for September 28-October 4 this morning at 10:30 AM EDT. I am projecting a +102 BCF natural gas storage injection, a third straight triple digit build despite record-setting heat throughout the week. Such an injection would be 13 BCF bearish versus the 5-year average and 11 BCF larger than last year's injection.
Projected Natural Gas Storage Injection For September 28-October 4: 5-Year Historical Comparison

As the Figure to the right shows, it would be the second largest injection in the past 5 years, behind only 2014's +104 BCF build. It would also be the third largest injection all-time for the week, behind only 2014's +104 BCF and 2011's +106 BCF builds. Over the past 25 days for which I have been making projections for the week, this is near the top of the range of projections which have been as low as +82 BCF back on September 20--before the recent spike in Permian takeaway send production to record highs--and +106 BCF late last week. Should a +102 BCF injection verify, natural gas inventories would rise to 3419 BCF while the long-standing storage deficit versus the 5-year average would slump to just -5 BCF. Click HERE for more on last week's projected injection.

With three weeks of larger-than-expected storage injections, investors are undoubtedly heading into today's report with poor sentiment. This does leave the bulls some potential for upside surprise should the EIA report a smaller-than-expected injection, particularly one in the double digits, though any report-driven spike would likely be temporary. I therefore expect that a reported storage injection under +99 BCF would be viewed with relief as, while still bearish, better than expected and could result in a near-term bounce to $2.30/MMBTU--or $2.50/MMBTU for the December 2019 contract. Barring a change to the near-term outlook, I expect that the bears would pounce on such a spike and aggressively add to their short positions. On the other hand, a reported injection of +108 BCF or larger would be further reinforcement of a loosening supply/demand imbalance and would likely result in prices dropping below $2.20/MMBTU near-term. A reported injection between +99 BCF and +108 BCF would be neutral versus expectations with prices equally likely to rally or pullback.

NG reaching $1.805 (see chart below) before a turn around is unlikely, but we could be something under $2.00 printed before the winter heating season is upon us(Oct-Nov start). NatGas @ ~$2 puts DGAZ at ~$200. DGAZ closed yesterday at $149.

[Swing Party]

NG has been consolidating since Oct 3.
Cold weather forecast could send NG up hard.
Cold weather showed up in early November 2018 and 2017. If it doesn't show up until late November (like 2016) it could get ugly.
Other factors that are currently affecting price action are:
1. Technical analysis which pretty uniformly shows NG in oversold territory just above major support.
2. Production oversupply which shows no sign of abating.

A couple of bearish insignificant factors that are nonetheless interesting are the
worldwide glut of LNG as reported by the Hellenic Shipping News, and the recent decrease of NG power burn in Texas due to increased renewable energy supply.

Overall I am still bearish NG

[Swing Party]

D started its roll into the Dec contract today. Spread is currently 20 cents. If EMCWF doesn't show cold snap soon contract could go down.

I'm still holding some.

[ybnormal]

Correct

[No-Quarter]

You are correct. TY

Analysis on NatGas chart and plan actions/trades based on analysis of NatGas chart, then transpose them to UGAZ/DGAZ. Don't rely only on UGAZ and DGAZ chart analysis. Right?

[ybnormal]

UGAZ/DGAZ price action has little to do with what price people are willing to pay for their respective shares. It's all about the futures market for NG

[fitzwell11]

Good add. I was looking at $90s but never moved. Big gains missed but congrats to you.

[No-Quarter]

UGAZ/DGAZ has been a wild ride up followed by a equally wild ride back down the past 30-45 days. Not for the weak spirits. Must be 'animal spirits'. Thx for the explanation.

https://investorshub.advfn.com/boards/read_msg.aspx?message_id=151299819

[Swing Party]

Yes that’s article to which I was referring.

From investopedia, “animal spirits describe the psychological and emotional factors that drive investors to take action when faced with high levels of volatility in the capital markets”

That’s what happened in winter of 2016 to help drive NG to $1.61

[No-Quarter]

Are you referring to this?

https://seekingalpha.com/article/4294027-bad-news-natural-gas-bulls-oversupply-just-worsened

I am intrigued. What more can you add about 'animal spirits'?

[Swing Party]

HFIR said animal spirits are about to take over NG market.
1. If the contract spreads stay as they are
2. and NGF20 drops to 2.20
DGAZ could go +200

It could get worse for NG than the above scenario. If winter weather is late to arrive and supply stays super loose like it is now then we could see a repeat of winter 2016 pricing. Fear and panic could drive NG below 2.00 and DGAZ goes full tilt 2016.

I currently own DGAZ

[researcher59]

EIA reports a build of 102 Bcf versus expectations for a build of 89 Bcf and the 5 year average of 74 Bcf.

NG drops from $2.49 to $2.43/mcf when the news hits.

Current storage is 3,205 Bcf which is 47 Bcf below the five-year average of 3,252 Bcf.

[researcher59]

EIA reports a build of 84 Bcf versus expectations for a build of 82 Bcf and the 5 year average of 82 Bcf.

NG drops from $2.59 to $2.55/mcf when the news hits.

Current storage is 3,103 Bcf which is 75 Bcf below the five-year average of 3,178 Bcf.

[Pandemonium75]

Cautiously adding here a little to insure gains in UGAZ

[researcher59]

EIA reports a build of 78 Bcf versus expectations for a build of 82 Bcf and the 5 year average of 73 Bcf.

NG rises from $2.54 to $2.55/mcf when the news hits.

Current storage is 3,019 Bcf which is 77 Bcf below the five-year average of 3,096 Bcf.

[pay streak]

Loading up on some D

[pay streak]

Loading up on some D

[researcher59]

EIA reports a build of 84 Bcf versus expectations for a build of 78 Bcf and the 5 year average of 66 Bcf.

NG drops from $2.43 to $2.40/mcf when the news hits.

Current storage is 2,941 Bcf which is 82 Bcf below the five-year average of 3,023 Bcf.

[db101]

If you're playing DGAZ... I hope you're on the SHORTS side

[No-Quarter]

Hurricane Dorian impact -

When hurricane's come ashore in Texas or Mississippi, the location of much natural gas harvesting and storage, hurricanes tend to decrease natural gas production, reducing supply, and causing price to increase.

When hurricane's come ashore in Florida, the location of much electricity consumption (air conditioners and refrigeration), and electrical utilities use natural gas to augment production during times of peak consumption, hurricanes tend to decrease natural gas consumption due to electrical utility outages (down power lines), increasing supply, and causing the price to drop.

The greater the impact of Dorian this weekend, and the more electrical utility power interruption occurs as a result, the more natural gas consumption will decrease.

[researcher59]

EIA reports a build of 60 Bcf versus expectations for a build of 59 Bcf and the 5 year average of 57 Bcf.

NG drops from $2.28 to $2.26/mcf when the news hits.

Current storage is 2,857 Bcf which is 100 Bcf below the five-year average of 2,957 Bcf.

[researcher59]

EIA reports a build of 59 Bcf versus expectations for a build of 64 Bcf and the 5 year average of 51 Bcf.

NG rises from $2.16 to $2.18/mcf when the news hits.

Current storage is 2,797 Bcf which is 103 Bcf below the five-year average of 2,900 Bcf.

[No-Quarter]

I would like to take credit for this chart study, but I stumbled onto it on another board this past weekend; https://stocktwits.com/symbol/DGAZ

GLTY

[researcher59]

EIA reports a build of 49 Bcf versus expectations for a build of 62 Bcf and the 5 year average of 49 Bcf.

NG surges from $2.18 to $2.23/mcf when the news hits.

Current storage is 2,738 Bcf which is 111 Bcf below the five-year average of 2,849 Bcf.

[researcher59]

EIA reports a build of 55 Bcf versus expectations for a build of 63 Bcf and the 5 year average of 43 Bcf.

NG rises from $2.11 to $2.14/mcf when the news hits.

Current storage is 2,689 Bcf which is 111 Bcf below the five-year average of 2,800 Bcf.

[researcher59]

EIA reports a build of 65 Bcf versus expectations for a build of 58 Bcf and the 5 year average of 37 Bcf.

NG plunges from $2.31 to $2.24/mcf when the news hits.

Current storage is 2,634 Bcf which is 123 Bcf below the five-year average of 2,757 Bcf.

[Denty]

Here comes the sell off. Traders always take profits and run it back down and then buy ugaz for the run up.

[researcher59]

EIA reports a build of 36 Bcf versus expectations for a build of 34 Bcf and the 5 year average of 44 Bcf.

NG drops from $2.25 to $2.24/mcf when the news hits.

Current storage is 2,569 Bcf which is 151 Bcf below the five-year average of 2,720 Bcf.

[researcher59]

EIA reports a build of 62 Bcf versus expectations for a build of 63 Bcf and the 5 year average of 63 Bcf.

NG rises from $2.33 to $2.34/mcf when the news hits.

Current storage is 2,533 Bcf which is 143 Bcf below the five-year average of 2,676 Bcf.

[researcher59]

EIA reports a build of 81 Bcf versus expectations for a build of 75 Bcf and the 5 year average of 71 Bcf.

NG rises from $2.46 to $2.48/mcf when the news hits.

Current storage is 2,471 Bcf which is 142 Bcf below the five-year average of 2,613 Bcf.

[researcher59]

EIA reports a build of 89 Bcf versus expectations for a build of 82 Bcf and the 5 year average of 70 Bcf.

NG rises from $2.25 to $2.27/mcf when the news hits.

Current storage is 2,390 Bcf which is 152 Bcf below the five-year average of 2,542 Bcf.

[researcher59]

EIA reports a build of 98 Bcf versus expectations for a build of 98 Bcf and the 5 year average of 70 Bcf.

NG rises from $2.30 to $2.32/mcf when the news hits.

Current storage is 2,301 Bcf which is 171 Bcf below the five-year average of 2,472 Bcf.

[researcher59]

EIA reports a build of 115 Bcf versus expectations for a build of 104 Bcf and the 5 year average of 84 Bcf.

NG drops sharply from $2.30 to $2.22/mcf when the news hits.

Current storage is 2,203 Bcf which is 199 Bcf below the five-year average of 2,402 Bcf.

[researcher59]

EIA reports a build of 102 Bcf versus expectations for a build of 103 Bcf and the 5 year average of 92 Bcf.

NG rises from $2.36 to $2.38/mcf when the news hits.

Current storage is 2,088 Bcf which is 230 Bcf below the five-year average of 2,318 Bcf.

[researcher59]

EIA reports a build of 119 Bcf versus expectations for a build of 109 Bcf and the 5 year average of 102 Bcf.

NG plunges from $2.38 to $2.33/mcf when the news hits.

Current storage is 1,986 Bcf which is 240 Bcf below the five-year average of 2,226 Bcf.

[researcher59]

EIA reports a build of 114 Bcf versus expectations for a build of 101 Bcf and the 5 year average of 97 Bcf.

NG drops from $2.58 to $2.54/mcf when the news hits.

Current storage is 1,867 Bcf which is 257 Bcf below the five-year average of 2,124 Bcf.

[researcher59]

EIA reports a build of 100 Bcf versus expectations for a build of 103 Bcf and the 5 year average of 88 Bcf.

NG rises from $2.56 to $2.57/mcf when the news hits.

Current storage is 1,753 Bcf which is 274 Bcf below the five-year average of 2,027 Bcf.

[researcher59]

EIA reports a build of 106 Bcf versus expectations for a build of 103 Bcf and the 5 year average of 89 Bcf.

NG rises from $2.61 to $2.62/mcf when the news hits.

Current storage is 1,653 Bcf which is 286 Bcf below the five-year average of 1,939 Bcf.

[researcher59]

EIA reports a build of 85 Bcf versus expectations for a build of 85 Bcf and the 5 year average of 72 Bcf.

NG drops from $2.58 to $2.57/mcf when the news hits.

Current storage is 1,547 Bcf which is 303 Bcf below the five-year average of 1,850 Bcf.

[researcher59]

EIA reports a build of 123 Bcf versus expectations for a build of 118 Bcf and the 5 year average of 70 Bcf.

NG drops from $2.58 to $2.57/mcf when the news hits.

Current storage is 1,462 Bcf which is 316 Bcf below the five-year average of 1,778 Bcf.

[researcher59]

EIA reports a build of 92 Bcf versus expectations for a build of 90 Bcf and the 5 year average of 47 Bcf.

NG rises from $2.45 to $2.47/mcf when the news hits.

Current storage is 1,339 Bcf which is 369 Bcf below the five-year average of 1,708 Bcf.

[researcher59]

EIA reports a build of 92 Bcf versus expectations for a build of 89 Bcf and the 5 year average of 21 Bcf.

NG drops from $2.49 to $2.48/mcf when the news hits.

Current storage is 1,247 Bcf which is 414 Bcf below the five-year average of 1,661 Bcf.

[researcher59]

EIA reports a build of 29 Bcf versus expectations for a build of 33 Bcf and the 5 year average build of 5 Bcf.

NG rises from $2.68 to $2.70/mcf when the news hits.

Current storage is 1,155 Bcf which is 485 Bcf below the five-year average of 1,640 Bcf.

**** Note - the EIA also retroactively decreased storage by 4 Bcf for past weeks hence a net build of 25 Bcf.

[researcher59]

EIA reports a build of 23 Bcf versus expectations for a build of 17 Bcf and the 5 year average draw of 23 Bcf.

NG drops from $2.67 to $2.65/mcf when the news hits.

Current storage is 1,130 Bcf which is 505 Bcf below the five-year average of 1,635 Bcf.

[researcher59]

EIA reports a draw of 36 Bcf versus expectations for a draw of 34 Bcf and the 5 year average of 41 Bcf.

NG holds steady at $2.71 when the news hits.

Current storage is 1,107 Bcf which is 551 Bcf below the five-year average of 1,658 Bcf.

[cicimici83]

Why is price falling?

[researcher59]

EIA reports a draw of 47 Bcf versus expectations for a draw of 47 Bcf and the 5 year average of 43 Bcf.

NG drops from $2.82 to $2.81/mcf when the news hits.

Current storage is 1,143 Bcf which is 556 Bcf below the five-year average of 1,699 Bcf.

* note the EIA retroactively corrected last weeks report to a draw of 200 Bcf, down from 204 previously reported.

[bosman]

Thanks for the update