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.
A fire at the Freeport LNG facility, which handles about 17% of U.S. liquified natural gas exports, has resulted in a big drop in U.S. natural gas prices. The natural gas is simply stacking up (tanking up? backing up?) in the natural gas delivery system in the United States because it can’t be liquified for ship transport to markets hungry for LNG in Asia and Europe.
Estimates now say that Freeport will be back in the LNG export business by the end of 2022–not quite in time to meet the surge in winter demand from Europe but I expect U.S. natural gas futures to start rising ahead of that schedule.
I already own shares of U.S. Natural Gas Fund in my Volatility Portfolio on my subscription JubakAM.com and JugglingWithKnives.com sites.
I’m adding it to the Jubak Picks Portfolio with an initial target price of $26.49. That’s the current 50-day moving average and well below the $31.72 the fund hit back on June 7.
Full disclosure: I own shares of the U.S. Natural Gas Fund in my personal portfolios.