Postcards: How to Invest in Negative Natural Gas Prices

Natural gas prices recently hit "negative" -$2.00 in the Permian Basin. You know what that means. Time to get some chips on the table in the Midstream sector. ͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­ Forwarded this email? [Subscribe here]() for more You are a free subscriber to Postcards from the Florida Republic. To upgrade to paid and receive the daily Republic Risk Letter, [subscribe here](. --------------------------------------------------------------- [Postcards: How to Invest in Negative Natural Gas Prices]( Natural gas prices recently hit "negative" -$2.00 in the Permian Basin. You know what that means. Time to get some chips on the table in the Midstream sector. [Garrett {NAME}]( May 2   [READ IN APP](   Market Update: The markets are still choppy, and they just had their first winning day in three. But tomorrow’s jobs report should be a doozy. Look for low volumes and a lot of chatter about new government jobs and their impact on inflation. Despite today's win, there is still a lot of negative pressure on the Russell 2000. Consumer cyclical stocks are getting hammered, and energy is trying to find a bottom. Stay calm. --------------------------------------------------------------- Dear Fellow Expat: I’m unsure how it may be more humid and hotter in Maryland than in Florida. But it is. Marylanders seem to measure the month by the degree of humidity, not by the calendar. The air feels like it’s been borrowed by a steam room. How 18 men stepped onto a baseball field today and had any fun playing is beyond my comprehension… But the Orioles beat the New York Yankees handily today - taking three of four in the series and reminding everyone that this is a great team. The other day, some people on Twitter accused Major League Baseball of making calls go in the Orioles’ way because the league wants the Orioles to win the World Series. That would be the first time… ever… that baseball wanted the Orioles to win… and the first time in a long time that the Orioles got calls. And if they're going to throw a few our way… we’ll take it. Speaking of things that are rigged… let’s turn our attention to Texas. One of the Florida Republic’s citizens has been begging for some insight into the state of affairs in the natural gas sector. The news isn’t great. But the opportunity is wonderful. Natural Gas Woes Since February, the Henry Hub natural gas prices (the U.S. benchmark for fuel) have been below $2.00. The cover story says there’s been weak winter demand and an oversupply of fuel since the end of 2023. That’s the basic economic assessment. But remember that speculators have largely walked away from the sector since the Biden Administration postponed new export facility projects. This is largely political, a move to appease its environmental base. We anticipate a shift back in favor of the facilities after the election—just because… But in the face of this challenging market, look at what’s happening in the Waha Hub - the price of natural gas in the West Texas Permian Basin. The price of natural gas in this region is… NEGATIVE $2.00. Natural gas producers are PAYING their customers to haul away natural gas. A similar phenomenon happened in April 2020 when the price of oil fell to negative $37. You couldn’t find any facility within 80 miles of Cushing to store the damn crude. So, why would companies pay customers to take oil away from them? Because everyone is engaged in a massive frenzy to maximize the production of their oil fields in the region - particularly as WTI crude prices hover near $80 per barrel. All this cheap natural gas is good for the U.S. inflation picture. But it’s even better for the midstream operators eager to move all this fuel out of the region. Even with negative prices, producers are still pumping crude and natural gas out of the ground - and more pipeline capacity is set to return. So… how do you take part in this? The answer is in the Midstream. As we say, there’s always Money in the Midstream - that part of the energy sector that connects the upstream producers to the downstream refineries and consumers. Think pipelines, shipping, and storage facilities that bring all that fuel to the market. Investors can’t go wrong with any of the big pipeline names in the Permian. They include Enterprise Products Partners (EPD), Plains All American Pipeline (PAGP), Kinder Morgan (KMI), Magellan Midstream Partners (MMLP) and Energy Transfer (ET). Of course, three of these are Limited Partnerships that require a K-1. But if you’re looking to take advantage of this, you can consider Kinder Morgan (KMI), which has more private storage than anybody in the region. Plains GP Holdings LP (PAGP) owns and operates a network of pipeline transportation, terminals, storage, and gathering assets in key crude oil and NGL-producing basins and transportation corridors in the United States and Canada. The company was founded in 1998. It ships crude oil and natural gas liquids (NGLs) from production areas to refineries, export terminals, and delivery points. PAGP is the holding group's ticker. PAGP shares allow investors to participate in the income generated from the assets owned by Plains All American Pipeline, L.P. It issues a 1099 to investors. No K-1. No mess. And the dividend sits at roughly 7%. The midstream energy sector is a beacon of reliability, offering investors a steady stream of income and growth potential. If you dare, just go over and pick that money up in the corner. Tomorrow, I’m diving deeper into our latest portfolio pick - now that we have the internet working. If you want access to this - and our upcoming Midstream report - click the link below. Stay out of trouble. And stay positive, Garrett {NAME} The Florida Republic Disclaimer Nothing in this email should be considered personalized financial advice. While we may answer your general customer questions, we are not licensed under securities laws to guide your investment situation. Do not consider any communication between you and Florida Republic employees as financial advice. Under company rules, editors and writers cannot recommend their positions. The communication in this letter is for information and educational purposes unless otherwise strictly worded as a recommendation. Model portfolios are tracked to showcase a variety of academic, fundamental, and technical tools, and insight is provided to help readers gain knowledge and experience. Readers should not trade if they cannot handle a loss and should not trade more than they can afford to lose. There are large amounts of risk in the equity markets. Consider consulting with a professional before making decisions with your money.   [Like]( [Comment]( [Restack](   © 2024 Garrett {NAME} 548 Market Street PMB 72296, San Francisco, CA 94104 [Unsubscribe]() [Get the app]( writing]()