Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19
Central Banks Move To Keep The Global Markets Party Rolling – Part III - 14th Aug 19
You Have to Buy Bonds Even When Interest Rates Are Low - 14th Aug 19
Gold Near Term Risk is Increasing - 14th Aug 19
Installment Loans vs Personal Bank Loans - 14th Aug 19
ROCHE - RHHBY Life Extension Pharma Stocks Investing - 14th Aug 19
Gold Bulls Must Love the Hong Kong Protests - 14th Aug 19
Gold, Markets and Invasive Species - 14th Aug 19
Cannabis Stocks With Millennial Appeal - 14th Aug 19
August 19 (Crazy Ivan) Stock Market Event Only A Few Days Away - 13th Aug 19
This is the real move in gold and silver… it’s going to be multiyear - 13th Aug 19
Global Central Banks Kick Can Down The Road Again - 13th Aug 19
US Dollar Finally the Achillles Heel - 13th Aug 19
Financial Success Formula Failure - 13th Aug 19
How to Test Your Car Alternator with a Multimeter - 13th Aug 19
London Under Attack! Victoria Embankment Gardens Statues and Monuments - 13th Aug 19
More Stock Market Weakness Ahead - 12th Aug 19
Global Central Banks Move To Keep The Party Rolling Onward - 12th Aug 19
All Eyes On Copper - 12th Aug 19
History of Yield Curve Inversions and Gold - 12th Aug 19
Precious Metals Soar on Falling Yields, Currency Turmoil - 12th Aug 19
Why GraphQL? The Benefits Explained - 12th Aug 19
Is the Stock Market Making a V-shaped Recovery? - 11th Aug 19
Precious Metals and Stocks VIX Are About To Pull A “Crazy Ivan” - 11th Aug 19
Social Media Civil War - 11th Aug 19
Gold and the Bond Yield Continuum - 11th Aug 19
Traders: Which Markets Should You Trade? - 11th Aug 19
US Corporate Debt Is at Risk of a Flash Crash - 10th Aug 19
EURODOLLAR futures above 2016 highs: FED to cut over 100 bps quickly - 10th Aug 19
Market’s flight-to-safety: Should You Buy Stocks Now? - 10th Aug 19
The Cold, Hard Math Tells Netflix Stock Could Crash 70% - 10th Aug 19
Our Custom Index Charts Suggest Stock Markets Are In For A Wild Ride - 9th Aug 19
Bitcoin Price Triggers Ahead - 9th Aug 19
Walmart Is Coming for Amazon - 9th Aug 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Natural Gas Companies: A Contrarian Bet on Higher Prices

Commodities / Natural Gas Apr 13, 2012 - 09:27 AM GMT

By: Money_Morning

Commodities

Best Financial Markets Analysis ArticleDiane Alter writes: The decline in natural gas stocks has been anything but natural lately.

With ample stores and cheap prices, natural gas-related equities have taken a beating and continue to be battered.

While it is always difficult to call a bottom, the tide may be turning for natural gas companies despite the latest data.


The price of natural gas fell again last week after the government reported an unexpectedly large increase in supply. To date, natural gas prices have slumped to levels not seen in 10 years.

Recent Energy Information Administration (EIA) reports reveal that the energy industry continues to deliver gas at a faster rate than Americans can consume it.

U.S. supplies grew by 42 billion cubic feet in the week ended March 30, pushing the country's total supply to 2.5 trillion cubic feet. According to Platts, a premier source for energy prices, industry analysts had expected supplies to grow between 33 billion to 37 billion cubic feet.

With natural gas stores bursting at the seams, some of the nation's largest producers have announced plans to scale back production.

Jen Snyder, head of North American gas for research firm Wood Mackenzie told the Washington Post, "There hasn't been enough demand to use all the supply being pushed into the market."

Where prices go from here depends a great deal on the weather.

Commodity Prices Drive Natural Gas Companies
A mild spring is forecast for most of the country, and the pleasant weather is expected to push natural gas prices even lower. A hot summer would enhance demand for the fuel as people crank up their air conditioners, requiring natural gas-fueled power plants to burn more of it.

Just this week natural gas prices continued their slide, falling below $2 per cubic foot.

Prices have not been below $2 since January 2002. Meanwhile, oil prices have stayed high and are taking a hefty chunk out of consumers' wallets.

Even so, several industry analysts see huge potential in the natural gas sector.

According to Money Morning Global Energy Strategist Dr. Kent Moors, low natural gas prices offer great opportunity.

"First," Moors said, "the price of natural gas will rise again. It's inevitable. And there is plenty of fundamental evidence in other commodity markets as to why. It might not be tomorrow, but it's coming."

"Second, and more important, investors seem so overly focused on the near-term asset performance that they fail to recognize real long-term potential," said Moors.

That allows investors to get in on natural gas companies while they are still cheap.

Opportunity in Natural Gas Companies
Natural gas is used across all sectors. This versatile fossil fuel has myriad applications commercially, in homes, in industry and in the transportation sector.

According to the EIA, energy from natural gas accounts for 24% of total energy consumed in the United States, making it a vital component of the nation's energy supply.

Globally, natural gas consumption is also surging.

The latest data available from the Worldwatch Institute, a new Vital Signs Online report, shows that the fossil fuel has rebounded 7.4% from its 2009 slump, putting natural gas' share of worldwide total energy consumption at 23.8%.

While the largest increase in natural gas use since 2009 occurred in the U.S., the Asia Pacific region also experienced strong growth.

Demand also climbed in Russia, the world's second-largest natural gas consumer. Even the Middle East, home to some of the richest natural gas resources in the world, but lacking in the proper infrastructure to facilitate much domestic consumption, saw a rise in demand for natural gas.

Currently, Japan is increasing LNG (liquid natural gas) imports after the Fukushima nuclear disaster forced the shutdown of atomic power plants and increased its reliance on gas-fired generators.

Bloomberg reports that Japan's second biggest city distributor, Osaka Gas Co., is in talks to import LNG from a trio of U.S-based companies: Dominion Resources ( NYSE: D); Sempra Energy (NYSE:SRE) and Freeport LNG LLC.

According to the Bloomberg report, Osaka Gas plans to buy more stakes in LNG projects to increase the volume it owns by the end of fiscal 2020 from 100,000 to 1.5 million tons per year.

Osaka is also in talks with BG Group PLc (PINK: BRGYY) and Gas Natural SDG Sa (PINK: GASNY) to purchase a portion of the supplies they agreed to buy from Cheniere Energy Partners LP's (NYSE: CQP) planned LNG export terminal at Sabine Pass in Louisiana.

All of this activity bodes well for the industry.

According to Moors, "The rise in demand for everything from electricity to petrochemical feeder stock, liquefied natural gas (LNG) exports, and even usage in vehicle fuels, will start driving that price up over the next two years."

But Moors isn't the only analyst bullish on natural gas companies.

Michael Murphy, managing partner and CEO of Rosecliff Capital is particularly optimistic on the sector, and told CNBC that investors should prepare for a rebound.

"We have had a very warm winter that forced the shorts to jump on natural gas, but that is going to change because the weather will turn," Murphy said. "The price of natural gas may go a little bit lower before it goes higher, but if we get a real energy policy set up, we'll be able to send natural gas around the globe and these natural gas companies, and natural gas prices, will go a lot higher."

Currently considered to be a contrarian bet, it appears that now might be the right time to invest in natural gas companies.

Source :http://moneymorning.com/2012/04/13/natural-gas-companies-a-contrarian-bet-on-higher-prices/

Money Morning/The Money Map Report

©2011 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules