At the heart of an increasingly complicated global arena, natural gas has become a political pawn.

In fact, out of all the markets directly affected by the Russian invasion – such as wheat, oil, gold, and the S&P 500 – natural gas is the only market that’s maintained its price levels.

That’s only partially because of Russia’s maneuvering. An enormous shift in global demand for natural gas was already underway. Russia just accelerated the trend.

The invasion ensured that the days of natural gas trading at $2-$4 per British thermal units (MMBtu) are never coming back.

On the contrary, continued globalization of the natural gas trade means there’s one clear winner, regardless of how everything unfolds in Europe.

And the rise of the liquified natural gas (LNG) market is a trend investors should be looking to jump on and ride for the foreseeable future.

As a political pawn, natural gas can have some stunning global implications…

For instance, Russia’s threat to cut off supplies this winter has resulted in a 15% voluntary demand reduction target for the entire European continent.

But the “voluntary” part doesn’t bode well for its new, European-style regulation because it almost guarantees a recession in Europe.

Throw in the wild card of weather, and a colder-than-usual winter could send the entire global system into a prolonged tailspin.

Natural gas, which is currently trading at $8/MMBtu, would at least double.

Europe’s entire economy is being held hostage, and its lack of foresight to diversify their energy imports means they have no one to blame but themselves.

It’s something we here in the U.S. are in danger of doing to ourselves as well.

Free Trading Resources Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career – at zero cost to you. Just click here to check it out.

Of course, right now Russia has only threatened that scenario. But that threat was paired with shutting off the Nord Stream pipeline, which is the main pipeline that supplies Europe.

Officially, it was shut off for maintenance. But the reasons for doing so were viewed to be as much political as technical – a warning shot of what might come.

But what’s going on across the pond is only half the story…

The U.S. is projected to dominate the LNG industry. And as global demand from Europe and Asia continues to accelerate amidst these geopolitical developments… the industry has big support.

On July 1, 2021, I identified this big trend in the commodities sector when I wrote…

Liquified natural gas (LNG) exports are becoming a long-term game changer. The global LNG trade will rise by 21% by 2025, with the U.S. becoming the biggest exporter. And China is set to surpass Japan as the biggest importer of LNG this year.

In the past, LNG has been a globally segmented market, with no real effect on natural gas prices. But now, it has become globally competitive, and with increased competition comes higher prices.

Since then, that’s exactly what we’ve been seeing.

The spread between European natural gas and U.S. domestic gas has been closing. And fluctuations in LNG demand are increasingly affecting domestic prices directly.

Like oil, natural gas is now a globally intertwined market.

Companies such as Cheniere Energy (LNG) – the biggest LNG producer in the U.S. – will directly benefit from this accelerating global trend.

Demand for LNG from Asia and Europe are only rising, and this is a company that’s well-positioned to benefit from that with more than 70% of its revenues coming from international markets. 

And the timing looks pretty good too.

Take a look at this chart of Cheniere with it’s sell-side analyst price estimate bands around it…

Taken one by one, sell-side analyst estimates are noisy, meaningless, and sometimes even comical.

But when looked at together, they set a great range to identify opportunities at extremes. We used this method several times last year to time buys in stocks like Tronox Holdings (TROX).

Currently, the lowest estimate stands at $128. Cheniere briefly traded below it before shooting back up. Now that price level should be a good support… and anything below it a gift opportunity.

This stock is a perfect addition to shield against any negative geopolitical outcomes in Europe. When Russia invaded Ukraine on February 24, Cheniere gapped up 14.5%.

And despite a stock market that was down 23% at its recent lows, Cheniere has maintained its gains. The only real pullback in Cheniere seems technical. It dropped to the $120/share level and then quickly bounced.

I’m not sure how everything will unfold in Europe this winter.

But regardless of the outcome, it’s a “heads I win, tails you lose” scenario for Cheniere’s stock price over the long term.

Regards,

Eric Shamilov
Analyst, Market Minute

Reader Mailbag

In today’s mailbag, we continue to feature testimonials from our Delta Report subscribers who made a 300% win, with their first “Breaking Point” penny option trade…

Yes! I was able to pay for my subscription on the Citigroup trade in 48 hours and had $450.00 leftover. So, I took my wife out for dinner to celebrate Friday night at our favorite restaurant and paid the bill.

– Joseph T.

I made 275% on the Citigroup calls in two days. I’m very happy with this trade!

– Paul G.

I bought five of the options on July 13 at 22 cents and sold three of the options on July 15 for 53 cents. And two of the options on July 15 for 98 cents. That was a total profit of $245. The profit percentage for the trade was 222%. Great return for small investment.

I was a bit hesitant on this trade and only bought five options, when my normal position size for this price option would have 15 options. I will be more aggressive on the next trade.

– Michael B.

Jeff, I made $168 on a one contract basis in each leg play. It was a great feeling. I will probably continue to keep it conservative for a few more trades to build up to a two-contract play. As a wise man once told me, “Bet not thy whole wad.”

– William Q.

Jeff, I used your put, followed by a call play on C. I sold a put for over $150, then purchased 10 calls for just under $150. Earlier today, I sold the calls for just under $1,000! I call that a BIG winner!

– Michael B.

I started a subscription to your service a few months ago, and I wanted to let you know how much I appreciate the information you provide! Towards the beginning of this year, I started to feel panicky about our investments in regards to inflation – I realized our typical “safe” investments just weren’t going to cut it, and we were losing too much purchasing power.

I started several subscriptions trying to find the right strategy, but this is the one I check constantly. I seriously appreciate the knowledge you share, and the way you share it. I’m a novice in trading options, and I’ve watched and read several tutorials on the whole process, but it always felt like I was only getting half the story – until I checked out your materials. I also like the frequency of your updates throughout the day, and the frequency of your recommendations as you see opportunities.

I’m starting out with small trades until I get the hang of it, but I’ve had a couple of good wins. I still have a few years to build our accounts before retirement, and I’m feeling more optimistic than I have in a while!

Thank you for sharing your knowledge and experience!

– Beth H.

Thank you, as always, for your thoughtful comments. We look forward to reading them every day. Keep them coming at feedback@jeffclarktrader.com.