Natural Gas just hit $5.70

[dan_s]

The front month (Feb) NYMEX contract shot up after lunch. It just crossed $5.70/mmbtu. This is getting very interesting.

I was telling someone yesterday that over the last twenty years I have seen natural gas prices spike four times when "experts" were saying the U.S. market had plenty of gas. There is no doubt we have plenty of gas reserves in the ground, but it will take prices over $6 to get the E&P companies to allocate capital back to the big dry gas plays. Reserves in the ground and production are two different things. Right now the Marcellus and Eagle Ford are the only two where significant new production is coming from. Both are driven by the liquids prices. RRC must be loving what is happening.

NGLs my be the big surprise this year. Higher NGL prices will really help a lot of the companies in our model portfolios. Most of them don't have any of their NGLs hedged. I like GPOR, ROSE and SM for their exposure to NGLs.

[setliff]

yeah, that was the feb contract that expired today at 5.55. march contract closed at 5.45.

[ghrcap]

The NYMEX front month closing price makes the nightly news, but the producers watch and pray for:

NYMEX 12 MONTH STRIP
Price
$4.66
Change
$0.17
% Change
3.80%

HENRY HUB SPOT
Price
$5.20
Change
($0.03)
% Change
(0.50%)

OPAL, WY SPOT
Price
$5.05
Change
$0.16
% Change
3.24%