Bullish on Natural Gas - 2

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dan_s
Posts: 37289
Joined: Fri Apr 23, 2010 8:22 am

Bullish on Natural Gas - 2

Post by dan_s »

From Seeking Alpha: Since the middle of September, natural gas prices have been in a very strong uptrend. Aided by an unusually hot summer, natural gas inventories fell back in line with the five year average (not quite). Additionally, the latest rig reports warn of a potential shortage, as we have not seen this rig count level since 1999. Last year we saw the rig count come in at 936, this year we are currently at 422. If the number of rigs continues to decline, we should continue to see a steady rise in natural gas.

I believe natural gas will be a great investment for the rest of 2012 and beyond. Currently, we are seeing support for higher prices from the lower rig count and a potentially cold winter. However, I do think we could see a minor pullback in the short term before the run up in winter.

Full Article: http://seekingalpha.com/article/947801- ... urce=yahoo

I do not think Chesapeake is the way to play natural gas. Several in our Sweet 16 look much better to me.
Dan Steffens
Energy Prospectus Group
dan_s
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Joined: Fri Apr 23, 2010 8:22 am

Re: Bullish on Natural Gas - 2

Post by dan_s »

Taking another look at the underlying commodity, I see some potential risks in the short term to natural gas prices due to the fact of falling energy prices. Crude oil has taken a major hit over the past few weeks as economic uncertainty continues and demand shrinks. Oil currently trades at around $86 a barrel. Gasoline has been in a downtrend for most of October and shows no sign of letting up - prices currently around $2.60. Heating oil is also in a downtrend and looks to be adding to losses as well. I mention this because the overall performance of a sector can influence individual commodities and their performance. Likewise, energy is tied to economic growth and the recent warnings around the world have not signaled strong growth. To be sure, I expect this downtrend to weaken as we head more and more into the colder months, so be sure to keep an eye out for the reversal upward.

The bottom line here is that when natural gas prices are in an uptrend and estimated at a continued rise, look for undervalued and solid fundamental stocks that will benefit. Chesapeake represents an undervalued play on natural gas, while Devon Energy serves as a value pick after the continued success it has seen in its properties. As I stated before, I think we could see a slight pullback in natural gas prices along with the rest of energy. However, I expect to see prices rebound to the upside as the winter months begin to settle in. Look for the uptrend confirmation in the coming weeks in the form of continued reduction of rigs and reports of a colder than originally estimated winter.
Dan Steffens
Energy Prospectus Group
dan_s
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Joined: Fri Apr 23, 2010 8:22 am

Re: Bullish on Natural Gas - 2

Post by dan_s »

Natural-Gas Prices Jump to 11-Month High
By U.S. Energy Information Administration - Fri 26 Oct 2012 13:34:14 CT
Cold Snap Expected to Boost Heating Demand

Benchmark U.S. natural gas prices rose sharply over the past week, touching the highest levels in nearly 11 months, on expectations colder weather will stoke heating demand, the Energy Information Administration said.

Henry Hub gas as of October 24 was $3.43 per million British thermal units, up 19 cents from a week earlier. Prices at many trading points rose on "news of a coming cold snap," the EIA said. On October 22, Henry Hub gas hit $3.49, the highest since late November.

In NYMEX futures trading October 25, November gas fell 1.6 cents to $3.434, down 5.1% from $3.617 at the end of last week and the lowest settlement in nearly three weeks.

Gas prices were up even as above-average temperatures in much of the U.S. tempered consumption. During the week ended October 24, total U.S. gas demand fell 2.9% from the previous week, led by a drop of 4.8% in residential and commercial use, with temperatures averaging about 1 degree Fahrenheit above normal.

Working natural gas in underground storage increased to 3.843 trillion cubic feet as of October 19, an implied net injection of 67 billion cubic feet from the previous week, 4.1% over year-ago levels and 7% over the five-year average for that date.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 37289
Joined: Fri Apr 23, 2010 8:22 am

Re: Bullish on Natural Gas - 2

Post by dan_s »

http://seekingalpha.com/article/955031- ... urce=yahoo

Some good ideas in the article above. I an currently working on a profile for SandRidge (SD).

For those of you really bullish on natural gas, Southwestern (SWN) has a rock solid team, both management and technical.
Dan Steffens
Energy Prospectus Group
wilmawatts
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Joined: Fri Apr 01, 2011 10:12 am

Re: Bullish on Natural Gas - 2

Post by wilmawatts »

Not sure about SD, but I buy your nat gas price might surprise on the upside argument.

Which might be great for SD, and firms like SARA
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