There's a worldwide race heating up to supply the world with liquefied natural gas (LNG) and right now the U.S. lags far behind.
But that's about to change, with the U.S. expected to go from 0% of global LNG exports today to 9%-12% as early as 2020.
Investors should get ready because certain natural gas stocks will surge along with the exports.
So far, only Cheniere Energy Inc. (NYSE: LNG) is allowed to export LNG out of the U.S. to both free trade and non-free trade agreement (FTA) countries- it hopes to begin exporting in 2015.
And Cheniere's stock has been on a tear since earning that approval.
When the DOE announced the approval of LNG exports from Sabine Pass on May 20, 2011, Cheniere was trading at $7.69. The stock soared over 30% that day, finishing at $10.04, and today trades nearly 301% higher at $30.82.
Now, investors have another chance to profit from an LNG company.
Once again the catalyst will be approval from the DOE to export LNG to non-FTA countries.Read More...
And a non-FTA permit is the key with LNG exports.
natural gas penny stocks
- Why Japan's Desperately Seeking U.S. LNG Two years after the Fukushima nuclear disaster, only a few of Japan's 50 nuclear power plants have been restarted. The island nation is increasingly turning to liquefied natural gas to supply its huge energy needs. Here's what this mean for the LNG industry. Read More...
Natural Gas Companies Enjoy Price Climb Ahead of Earnings
There's not much to love about an ultra-hot U.S. summer - unless you're investing in natural gas companies.
The record-breaking temps (the U.S. is on pace for its hottest year ever) have made the country crank the AC, lifting natural gas prices and stocks.
"Hot weather forecasts and elevated cooling demands continue to provide a boost to the market," Addison Armstrong, director of market research at Tradition Energy, wrote in a research note Tuesday.
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These Natural Gas Stocks Will Bounce Back As Demand Rises
Now is the perfect time to invest in natural gas stocks.
To many investors, that may seem counterintuitive. After all, natural gas has been the red-headed stepchild of energy for years.
But prices for this plentiful alternative fuel are just beginning to turn higher after a four-year slide that saw values slashed by more than 80%.
That price decline - from a high of $10.38 per million British thermal units (BTUs) in July 2008 to just $1.83 in April of this year - was primarily the result of a decade-long increase in U.S. gas production, which climbed by 21.6% from 2002 to 2011.
That trend finally has begun to reverse, as the rate of inventory build-up has fallen steadily for almost three months. What's more, the size of the current natural gas surplus relative to year-ago levels has fallen by 23% since late March.
Three big reasons explain this shift:
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Good News for Natural Gas Stocks
Finally-encouraging news for beaten down natural gas stocks.
The fossil fuel welcomed words from the International Energy Agency (IEA) Tuesday that gushed about the boom in unconventional natural gas over the next two decades. The agency said the incoming supply increase would let the United States and other countries enjoy cheaper energy and shift the export reliance away from the Middle East.
IEA Chief Economist Faith Birol told Reuters that growth in shale and other new available forms of natural gas could mirror gains made in conventional gas in Russia, the Middle East and North Africa combined.
"Unconventional natural gas will fracture the status quo and will be a complete game changer with major geopolitical implications," Birol said.
Over the past years, high natural gas prices were a driving force behind new ventures into previously unavailable, unconventional gas reserves including tight-gas, shale gas and coal-bed methane resources.
But recently, ample stores and waning demand have weighed on natural gas prices, taking the commodity down to record low levels.
However, things are about to change.