February in European Gas
As a trading coach, not many people are knocking down my door when the market is nicely trending, confidence is high and the P and L is rolling in. Therefore, it won’t surprise anyone to learn that I am currently the busiest I have ever been by a country mile.
February was another mess of a month after January had destroyed anyone left who was bearish and then did the exactly the same to those who had concerns about storage and the potential for colder weather.
Gravity was provided by tepid Asian LNG demand and the constant threats of an SSW actually turning into wet and warm misery on delivery. Lurking in the background was the very real and obvious threat of DT attacking Iran, something which has come to fruition this weekend.
For anyone brave enough, there was actually a pattern that appeared during the month. If you did nothing else but buy on a Tuesday morning and then sell on a Friday, then February would have been nice and profitable, with the massive weekend risk avoided completely. I appreciate that hindsight is a whole lot easier than real time right now though!!
Flat price actually finished February slightly lower than it did January, despite the Iran threat. Spreads were sold down more aggressively, as the storage risk dissipated, and Australian LNG cargoes ended up as far a field as Canada and Turkey.
The statistic that sums up how difficult the market really is, was that experts put an 80% probability on the US attacking Iran and yet the market fell overall and on Mondays, did so dramatically!!
February Full Time: Winter Weather and LNG United 1 Middle Eastern Conflict Potential 0
Onto this morning and DT has undoubtedly taken the biggest risk of his premiership so far. Another stunning operation has taken out a lot of the Iranian top brass, but it is still far too early to say how this one will go. There is already talk of a ceasefire, a school has been hit and allegedly killed lots of young girls killed and there are protests going on for both sides globally.
I am far from an expert on these things, but my gut feel is that it needs to be over quite quickly, as protracted American involvement in the region will probably not end well for anyone.
As for the impact on gas prices, I haven’t got a scooby do! Oil opened up about 10% before falling back on profit taking, but I am confident that a lot more people were long oil than are currently long European Gas. I am also fairly certain that there is much less head room for protracted disruption in the gas market than there is for oil. My last call is that it is going to be messy and a headline dominated market for the foreseeable. Donald and social media will be playing a much larger part in the European Gas Market than anyone could ever really want.
On the positive side, at least overnight trading starts soon!!! arrrrrrrrrrrrrrgggggggggggghhhhhhhhhhhhhhhhhhhhhhhhhhhh