KOLD

Weather will still matter, but the fundamental deficit will skew the risk/reward to the upside.The 2019/2020 winter was the exact opposite of what we will see for the 2020/2021 winter.Last year, we were oversupplied by 3-4 Bcf/d, while this year, we will be undersupplied by 5+ Bcf/d.This large difference means that even if the weather outlook was just normal, the price reaction will be bullish.For us, we think natural gas producers are the best ways to play this incoming natural gas rally. We believe the 2021 curve is undervalued despite the recent rally and the 2022 curve should also be around $3. With NG producers over discounting the curve due to fear of overproduction again, we think they are a good reasonable risk/reward bet today.

The natural gas market has a lot of things going well so far with the exception of the early November weather forecast.Now aside from the bearish weather that's coming, the physical market has really tightened up in the last few days with Henry Hub cash now trading over $2.8/MMBtu.LNG exports, which was delayed last week, are finally now getting close to ~9 Bcf/d with this psychological figure hitting by this weekend.On the production front, all of the shut-in gas production is now back online with the average coming in around ~88 Bcf/d. But as you can see from the recent production trend, the initial jump from wells that were shut-in will subside, and we expect Lower 48 production to trend back loser by November. We still maintain our view that Lower 48 production should be closer to ~86 Bcf/d.So to sum up the current market dynamic: 1) Cash market firmed up with LNG exports returning and physical market balance improving. 2)Weather outlook is bearish for early November, which will limit the upside in natural gas futures. 3) Production is set to keep declining into year-end setting us up for a very bullish 2021.

Natural gas stockpiles rose by 49 bcf.Approaching a record high in inventories with four weeks to go in the injection season.Natural gas makes a new high.Politics over the next few weeks is the most significant factor for the energy commodity.Support and resistance levels for traders - Futures are the best route; BOIL and KOLD provide an alternative.

Natural gas futures (NG1:COM) closed +3.8% to its highest settlement since January 2019 as forecasts continue to predict colder weather while liquefied natural gas feedgas flows tick higher.The latest 6-10

This Thursday, we expect the EIA to report 3,922 bcf of working gas in storage for the week ending October 16.We anticipate to see a build of 45 bcf, which is 47 bcf smaller than a year ago and 30 bcf smaller vs. the 5-year average.The storage "surplus" relative to the 5-year average is projected to shrink by 194 bcf by November 20.Next week, the number of nationwide HDDs is currently projected to surge by as much as 88.1% w-o-w (from 50 to 94).On November 5, the EIA is expected to report the first storage draw (for the week ending October 30).

Spot natural gas prices at the Waha hub in the Permian Basin turn negative for the first time since April, Reuters reports, as mild weather cuts demand for the fuel.But

The weather outlook towards the end of October has improved.But shut-in production returning to the market and delays in LNG exports are keeping cash weak.Early November cold won't do wonders for the storage surplus, but it will help prop up the physical market, which could reduce the drag it's been having on futures.With all said and done, we still find the November contract expiration very unappealing to trade around. We are still waiting for EQT to correct down to $14.4 level before we start to initiate a position.So to summarize, near-term fundamentals are starting to improve a bit with colder weather. Cash remains weak and delayed LNG exports will keep pressuring the physical market. Longer term, the fall in Lower 48 production will be very bullish, and we want to get positioned in the right natural gas producers to take advantage.

Hurricane Delta prompted buying. The latest EIA data continues to be a warning sign. A new record higher in stockpiles is on the horizon. Frack is a curse word for some. Election day and the start of the withdrawal season come at the same time- How serendipitous.