The "gassers" have been a big drag on the Sweet 16 in 2015, but there is a good chance they lead the pack in 2016. By adding Antero Resources (AR) and Southwestern Energy (SWN) to the Sweet 16, I have increased our exposure to gas. Antero is off to a good start, but SWN is now trading near an all-time low.
You don't hear as much about gas as you do about oil, but demand for the clean burning fuel is going to ramp up in 2016, at the same time U.S. production is on decline. That is usually a recipe for increasing price. Obviously, the warm start to winter has put pressure on natural gas prices. However, the weather pattern has changed and cold air is now spreading eastward. More importantly, cold is heading South. This will cause triple digit weekly draws from natural gas storage as utilities need to suck gas from storage to meet the spike in demand for space heating.
Read the article at the link below. We are also going to see increased natural gas demand used for power generation, export and as a transportation fuel.
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http://www.bizjournals.com/sanantonio/n ... 1451317624
One area where natural gas has emerged as a winner is electricity generation.
The U.S. Energy Information Administration reports that natural gas has become the cheapest source of power production. EIA figures show it costs $869 million to build a natural gas power plant capable of generating 1,000 megawatts of electricity compared to $2.72 billion for coal and $4.64 billion for nuclear.
Utilities like San Antonio's CPS Energy are turning away from polluting coal plants and switching to cleaner burning natural gas for reliable baseload power.
The municipally-owned utility plans to shut down its Deely Coal Plant off Calaveras Lake in favor of the Rio Nogales natural gas plant in Seguin, which will generate a comparable amount of electricity with almost half the emissions.
Details have not been released but CPS Energy confirmed that it has entered into a joint venture agreement to build a pipeline that would take natural gas from fields in the Eagle Ford Shale and deliver it directly to the utility.
Sweet 16 Update - December
Sweet 16 Update - December
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Sweet 16 Update - December
The front month NYMEX contract for natural gas futures is now trading at $2.25/mmbtu. That is about $0.40 higher than it was just two weeks ago.
Looking at the charts, I see mild resistance at $2.50 and $2.80 for natural gas.
Looking at the charts, I see mild resistance at $2.50 and $2.80 for natural gas.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group