At the close today, July 26, the Teucrium Corn Fund (CORN) was up 2.55% and the Teucrium Wheat Fund (WEAT) was ahead 4.11%. Both of those commodity plays outgained the U.S. Natural Gas Fund (UNG) with its 1.38% move higher. But for consistent gains–and the potential for more–I’d have to say that natural gas is my favorite commodity.
My Quick Pick this week is Cheniere Energy (LNG), a liquified natural gas producer that I currently own in my Volatility Portfolio on JubakAM.com and plan to add to my Jubak Picks portfolio as well. The stock has fallen as U.S. natural gas prices have taken a hit after a fire at the Freeport liquified natural gas facility that has caused a backup in U.S. LNG exports. I think it’s a great time to get in on this long-term story at Cheniere, which just announced that it had given the go-ahead to the construction of a new LNG chain at its Corpus Christi facility. That chain won’t be in operation until 2025 but I see the demand for U.S. LNG continuing to rise through then.
I’m using the continued weakness in natural gas prices and in the U.S. Natural Gas Fund (UNG) to add the shares to my Jubak Picks Portfolio. The U.S. Natural Gas Fund was down another 5.90% today to close at $23.78.
Russia’s Gazprom has told Poland’s government that it will stop supplying natural gas to Poland beginning on Wednesday after Poland refused to pay the supplier in roubles. Western sanctions have made it almost impossible for Russian companies to collect payments in dollars or euros. The decision to stop natural gas supply to Poland also followed on the country’s announcement on Tuesday that it was imposing sanctions on 50 entities and individuals including Russia’s biggest gas company. Polish ministers told a press conference that Poland had sufficient supplies of gas to weather the interruption
Anybody looking to reduce their energy reliance on Russia is looking for LNG (liquified natural gas) right now. As tight as supplies are, however, and Europe is essentially only able to increase its supply by poaching natural gas headed for Asian markets, the supply of new facilities to liquify natural gas and load it onto tankers for for delivery to European terminals looks even tighter.
Norwegian oil and natural gas producer Equinor (EQNR) said Wednesday, March 16, that adjusted permits from the Norwegian government will allow higher natural gas production over summer from the North Sea Troll and Oseberg fields as well as the Heidrun fields in the Norwegian Sea. With European countries looking for alternatives to Russian natural gas Equinor can basically sell all the gas it can produce even at higher prices. Natural gas futures closed at $4.81 per million BTUs today in New York. That’s up from $3.80 on January 20. That’s a 26.6% increase. I added Equinor to my Volatility Portfolio back on January 21 as hedge against a Russian invasion of Ukraine and wide-reaching sanctions. That position is up 23.14% as of the close on March 18.
On Saturday, January 15, in my “Saturday Night Quarterback” post wrote that conflict (a more comprehensive term than “war) between Russia and Ukraine remained a low probability event–but that the probability wasn’t zero and the the odds of conflict had increased in the past month. What’s happened since then? The odds of conflict have climbed
In the week ahead expect the financial markets to pay more attention to the crisis unfolding in Ukraine. War between Russian and Ukrainian forces on Ukrainian soil remains a low probability event in my opinion but it odds aren’t nearly as low as they were a month ago.
Like many oil-related stocks Kinder Morgan (KMI), the operator of 70,000 miles of natural gas pipelines, has moved up strongly during the recent rally in the price of oil. The stock, a member of my Dividend Portfolio since February 24, 2016, has gained 38.13% in 2021 to date as of the May 26 close. The stock has gained 26.67% in the last three months and 10.11% in the last month. The dividend, which produces a yield of 5.89% isn’t in danger. And I’m not selling because I’m worried about that potential. But growth at Kinder Morgan depends on the company’s ability to buy or build new pipeline capacity and earn a high rate of return on that investment.
