There's a new global capital shift that's affecting how to invest in natural gas today for maximum profit.
You see, there was a time when U.S. manufacturing companies invested heavily in the Middle East because of the region's low-cost energy sources.
Today, that money is coming back home.
International companies have noticed that the United States is a cheap source of natural gas. That's because the rise of hydraulic fracturing triggered a boom in U.S. natural gas production.To continue reading click here...
The Most Unlikely Beneficiary of the Natural Gas Boom
An array of energy's sub-industries are making a fortune from America's natural gas boom.
Rigs, pipelines, rail, wastewater treatment, trucking, seismic imaging, well-site security... And a lot more opportunity is on the way, like the deal Kent just uncovered.
But perhaps the most unlikely beneficiary of the shale revolution is the coal industry.
After all, "King Coal" has been dethroned in recent years by the swelling supply - and bargain prices - of clean-burning natural gas. Indeed, thermal coal at the Australian port of Newcastle, the Asian benchmark price, is currently near lows not seen since November 2009.
Australian producers have especially been struggling. They've been cutting costs and paring back production because U.S. and large project financiers like the World Bank are pulling away from coal projects.
And overall, ever-increasing environmental regulation is discouraging coal-powered electricity.
But the dynamic is suddenly changing.That's why these $19 coal shares could jump to $26...
How to Invest in the Global Race to Export LNG
As Money Morning Global Energy Strategist Dr. Kent Moors told us yesterday, the United States on Aug. 7 finally approved its third application to export LNG (liquefied natural gas).
The delays in the U.S. LNG export approval process have been frustrating an industry that's ready to capitalize on the price differences between North American and Asian natural gas prices. Asia LNG sells for about $16 per million BTU versus less than $4 per million BTU in the United States.
While the U.S. Department of Energy streamlines this lengthy approval process, our neighbor to the north is also using its abundance of shale gas to race into LNG exports.
You see, Canada has a lot of natural gas.
Why this Country is a Huge Profit Opportunity for Natural Gas Companies
Here at Money Morning, Dr. Kent Moors and others have spoken often about how the coming liquefied natural gas (LNG) export boom will be a huge profit windfall for natural gas companies. LNG exports should begin in earnest from this country in 2015.
But there is a natural gas export boom that is occurring right under many investors' noses.
Vast amounts of U.S. natural gas are currently being shipped via pipelines to many experts' favorite emerging country.
In fact, Money Morning Global Investing Specialist Martin Hutchinson called investing there a "100-year opportunity."
The country in question? Our neighbor to the south: Mexico.
Obama Finds A New Way to Strangle US Economy
The scary question is, is he continuing to wound this recovery on purpose or by accident?
And which answer is worse?
Last Tuesday, President Obama announced his "Action Plan on Climate Change."
One of main "actions" is to kill a core piece of the US energy sector.
Among other things, he promised to use the Environmental Protection Agency regulation of carbon emissions to phase the U.S. out of coal fired power, even for existing stations.
Of course, environmentalists praised this move as a bold step against global warming.
Unfortunately, they're not very good at the economics of this.
So, I ran the numbers. And what I found was infuriating but not surprising: Regulations like this are the principal things slowing U.S. economic growth.
Did the Math
Natural Gas Stocks are About to Reprise an All-Star Performance
Everyone likes a good comeback story where large obstacles are overcome on the way to a favorable outcome.
And we're about to see one in the investment world...
The shale gas boom seemed to be a disaster for the natural gas industry as the price of natural gas plummeted over a five-tear period to reach a multi-year low below $2 per million BTU in April 2012.
Buy Signal: Top Hedge Funds Are Moving Into Energy
There is an easy way to find out where the market thinks a particular sector is heading: Check out the movement of futures contracts held by top hedge fund managers.
These days the signal is clear and pointing in one direction. It's in energy.
Reports have recently surfaced that hedge funds are moving into commodities in general, and energy commodities in particular. What's more these moves are more bullish than at any time since midsummer.
The reason is the same one that we have been discussing for several months. Demand is coming back more quickly than anticipated.
Energy spikes usually start that way. Indicators of market resurgence seem to rush onto the scene, catch analysts by surprise, and the acceleration begins.
But this time, those who survey the market should have seen it coming. After all, the indicators and benchmarks have been there. I have been laying them out here in Money Morning for weeks.
Two elements have emerged over the past several days that finally require the pundits to catch up with us.
First, it is becoming impossible to ignore what is happening in the U.S. and China. Both markets are moving up, with that direction intensifying of late.
In the U.S., forward economic indicators are developing into a bull market signal. This has augmented the run we have experienced of late, largely due to the combination of an oversold condition, no bad news (Congress and the White House may at last be learning how to play nice in the sandbox), and money moving back in.
But it's the second factor that everybody will be talking about this week.
Betting on the Coming Boom in Natural Gas Prices
As I write this from Pittsburgh, the temperature has reached the single digits. This is not a big deal for some of you elsewhere - like the Plains States or New England - but it does serve as a reminder of what season this actually is.
There is also something else happening this morning.
Natural gas prices are moving up.
There is still some way to go before these natural gas reached the $4 plus level (still the perceived breakeven point for a number of producers). Still, after testing the low $3 range earlier in the month, the temperatures in the East are certainly bringing gas back into perspective.
Natural gas usage remains sensitive to temperatures and weather conditions during the winter. Last year's unusually warm temperatures depressed gas prices more than usual.
That was because the amount of gas extractions was much above anticipated levels. The combination of lower demand and higher supply translated into a downward price pressures.
But we are in a different environment for gas production than we were a few years ago.
Until 2005, the assumption was that the U.S. would need to import more liquefied natural gas (LNG) to compensate for accelerating declines in conventional domestic production.
LNG overcomes the primary problem faced by natural gas users. Available supply is traditionally limited to where pipelines are running. LNG, on the other hand, cools gas to a liquid, allowing it to be transported by tankers almost anywhere by water, regasified at an import terminal, and then injected into the local pipeline network.
By the middle of last decade, estimates of how much domestic gas need would have to be imported via LNG were as much as 15% and as soon as 2020.
But the ability to exploit unconventional deposits (shale and tight gas, coal bed methane) has dramatically changed the equation.
2013 Natural Gas Prices: Now is the Time To Be Bullish
Forget the Farmer's Almanac.
As we move into the winter season, two things are becoming clear. First, this one will be colder than last year, nationwide. Second, natural gas prices are moving up.
A colder season ahead is an almost statistical certainty. The likelihood of having a repeat of last year's mild winter is quite low. And my second assertion is now supported by several factors.
Until very recently, the changing of seasons was a determining factor in gas prices.
The warm winter throughout much of the U.S. last year certainly contributed to the dive that saw gas prices plummet to near $2 per 1,000 cubic feet (or million BTUs), the NYMEX futures contract unit.
The bigger issue, however, has been the game-changing entrance of unconventional natural gas supply in North America. Both the surplus of in-market stored gas and the ready availability of expanding reserves have been driving factors in lowering prices.
The amount of available gas is staggering.
Known reserves of shale and tight gas, coal bed methane, and remaining free standing volume now allow up to a 25% increase in supply per year into the foreseeable future.
Now, nobody would actually drill that much, because they would destroy the market (the classic example of "drilling" oneself in the foot).
But the ready availability was restraining pricing. That resulted in a period in which gas rig utilization has fallen each month - to its lowest level in over a decade. The industry has been slowing the introduction of accelerating volume into what had been an oversaturated market.
The hottest summer on record also contributed to a steady improvement in price. As the power-generating sector moves quickly toward low-priced gas as the fuel of choice, rising temperatures also increase the need for gas.
But now, at last, the balance is forming.
The inventory is now the smallest in the last two years, as demand picks up in petrochemicals, industrial usage, and even vehicle fuel prospects.
The major thrust is beginning.
This will not be a straight line for natural gas prices. Volatility cuts in both directions.
But one thing is clear.
The gas market is about to get a whole lot stronger...
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