There are two contrasting dynamics when it comes to natural gas prices. First, the amount of recoverable volume has been accelerating, thanks to increasing unconventional (shale, tight, coal bed methane) reserves and technological improvements to extract it.
A rise on the supply side would generally reduce prices, especially if the number of operators continues to increase. More gas moving on the market from more suppliers results in a downward pressure on prices.
The second dynamic, however, is moving in the other direction, enticing the increase in drilling and expansion of infrastructure.
This factor considers the demand side, and there are at least six major trends colliding to increase the prospects for gas usage as we move through 2013.
As a result, I expect natural gas prices to see a 25% increase from current levels... here's why.
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About the Author
Dr. Kent Moors is an internationally recognized expert in oil and natural gas policy, risk assessment, and emerging market economic development. He serves as an advisor to many U.S. governors and foreign governments. Kent details his latest global travels in his free Oil & Energy Investor e-letter. He makes specific investment recommendations in his newsletter, the Energy Advantage. For more active investors, he issues shorter-term trades in his Energy Inner Circle.
If notis the time to buy nastural gas why did you give a sale on LNG?
I love this article.. as a 25% stake holder in a family nat. gas royalty partnership involving 340 acres now producing gas in the pennsylvania marcellus region, this article gives me great hopes for 2013 and on into the future.. what do you think the price outlook will be for a year from now?.. say january 31 2014?
What do you think of Encana?
Once again, Kent was "on the money" about natural gas. His commentary,
without specific recommendations, is fuzzy on the issue if he is just
supporting the NG companies now in his portfolio (EA list) or if he is
recommending changes/new companies. Thx.
Still forcasting the weather eh, Kent? I mostly agree with your assessments regarding increased use of gas and LNG exportation, but I am curious how it is that you know in advance how cold or warm the coming winter is going to be. Also, I didn't see anything in your article about the other countries that are ramping up LNG exportation and what result that will have on the U.S. prices for export.
Good question Jeff, I look at all the picks and wonder why not even half of them are in the positive area, I do know that IOC has hoards of NAT/GAS that they have not been able to get to customers but the Govt. just signed a deal with them in New Genie for a 50/50 split on building a pipeline to the coast for export and that stock is at a good price right now especially options, don't know the time frame for when pipeline to be done but it will be a big exporter and the ships will transport a lot cheaper from there verses TX. when they get that export up which is still a year away. A good play that is a good buy right now also I think and have been in and out of them the last two years is FCGYF Veresen which also has a monthly Divy at .08 and if they get there permit to export of west coast of Oregon they will be the only player on west coast, hoped that helped, 2 Bil $ Company that is in a lot of other things can not go wrong on a 10 to 12$ stock with a mn. Divy of .08 there checks don't bounce. Good luck I am not the Doc and don't have a news letter but those are some I am and have played in the past FCGYF does not do a lot of volume trading wise but they are solid and under the radar one that is not under radar has a big note due but I doubled my money and got out in a year and getting ready to get back in is PBKEF lots of movement volume wise and just got through some inter company paper work but they are a mn. Divy at .08 and the first Q 2013 they are going to tie 53 wells that are done into pipeline and the Chinese have been visiting them in there rental cars I know that. Food for thought, we donate our Divys to usabaygreen.com for the cancer leukemia from them and run an ad saying that at top of site, check it out we also donate all our Amazon purchase profits that you buy off that site to the same foundation which has been around a long time, it is the same link for Amazon but this way Amazon pays for the ads and we give them 100% and they help all not just New York it does not matter where you are from they help all children in there fight for life from everywhere. Thanks and good luck, and you are right the Doc should be addressing the other exporters because they will be doing it before the USA, Happy Holidays !!
Nat gas is an interest to me.Please forward your recommendations, I will get back to you after reading. John
please suggest yout fav stocks and etfs..relatedto nat gas…tthanks!!! i am looking at boil ung, xco, chk, lng, clne, eca
I have BOIL and LNG. Good to hear since they havent been the best of the bunch
Any recommendations?
Natural gas prices will be falling due to over supply issues.
I highly doubt it will hit 4.25 by March.
Where did you get 35k to convert an engine? The engine don't know what it's running on. All you need is a fuel / air delivery system with the proper ratio. During the 70s Arab oil embargo my buddy bought a kit and converted his Chevy work pick up to LPG. Basically it was a carbretor replacement, an LPG tank and some hardware. He did the conversion with normal tools on a weekend. With modern digital fuel injection, conversion should be easy.
Hi I am a trader of stocks and commodities I am very interested in how I could see the converter you talked about for your car to be able to use natural gas thanks Sue
Heavy duty motor truck usage of CNG/LNG in the US is now a budding event. Cummins Engines announced the release of its production of several natural gas fueled engine models last year using an injector system from British Columbia. So far Detroit, Catapillar, Mercedes Benz and International have not followed persuit. It could be a boom for terminal-to-terminal truck fleets not requiring fuel on the road The price is roughly 2.00 USD per gallon less expensive than current diesel fuel. The costs savings is quite significant as heavy trucks average 6-7 MPG. It will also result in less engine air emissions currently requiring expensive urea reactant fluids on new diesel engines to reduce current Federal air emissions regulations. As you mention, Canadian truckers already are using CNG/LNG to some extent. The US market is not aware of any fuel injector replacement retrofit for natural gas fuels. Older intake maniford injected propane fueled diesel engines back in the 70s,80s or 90s did not provide satisfactory performance for over-the-road heavy truck engines.
converted my homr generator to nat gas 3 years ago. just a small cost to the carb.
My situation is a little unique, I know…but I happen to live (retired) in Japan. Of course, I want to participate in the natural gas explosion (pardon the pun) gathering on the financial horizon, and I will. However, I am also HOPING that my home heating bills (I live in northern Japan) will see a decrease also, as the US comes online to compete for LNG export business vis a vis Indonesia and Australia, which have had the Asian LNG market all to themselves for many decades. With the US entry into this market, I hope to see the world/Asian market price of LNG turn down, even as the price in the US turns up. This will be an interesting phenomenon to watch.
Dr. Moors, it would be very interesting to hear your perspective on the pricing dynamics that might ensue here in Japan and Asia in general as this situation begins to unfold. Even now, some Japanese utilities are setting up contracts to buy US LNG when it starts to come online in 2015 or so.
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All this talk may be fine for you who seeks $$$, and who lives in a safe zone. But living in a gas fracking area invaded by scum bags has been a nightmare; from crime to horrid traffic. I hope the price continues to fall. Already; huge hotels newly built for these carny migrant workers stand empty.
Kent I hope you are right that natural gas have a 25% increase for 2013. In april 2012 I recieved $1.46/MMBTU @ the well head for dry gas well production. I am a producer so I hope you are correct. As the drilling activity for conventional and basically unon-ventional drilling in dry gas basins is at stand still. Hope your forecast for natural gas for 2013 is 25% per 2012. This to me is far out -prediction but hope you are correct.
All of this gas going nowhere fast. Couple companies that seem to be making head way IOC has way to much stockpiled gas and now the country they have this gas in has cut a deal on a 50/50 basis to get it to ports so it can be sold to China, India , etc. via a new pipeline system to the sea/ocean will be a huge supplier that has a lot of product and half a world closer to the final destination, just the time for the pipeline and there cash will be coming in. The nat gas in the states will be a big hit at the power plants , but one thing is the north east infrastructure for delivery to customers is older than old and there will be many problems with out updating wooden pipes that are seeping now, the power plants will have new lines but the customers need help same as water infrastructure, they both need updated badly and the Govt. knows which will eventually make some contractors very strong. Who gets there oil the at the cheapest price to the refineries. Location location location, HFC, DK, and Western are not big boys but they have been ringing the cash register because of the price they pay for the raw juice, and as long as Obama keeps the Keystone dragging along blaming the EPA when the north section could be half done those little guys will do well. US Govt. is it's worst economic enemy and has a leader that has no idea of the word budget or money maps portfolio would be shining in decision needs to change or the shorts are coming, it is a shame but riding the money map picks will pay off but the time is hurting us all. Canada is way ahead in common sense in energy and mining and the US is pushing them to China and they have the cash actually China uses our cash to buy what is right across our border, the interest from our China Obama debt is a great value for them but we get the left overs. 2 years average to get permits in Canada 7 years in USA HOW SAFE ARE WE! TREE HUGGERS are costing our kids.
All of these reasons are all fine and dandy.. But where does he get $4.35 by March from.?I assure you that it didn't come from his research of weather, or anything in the news… Simply look at the charts of Natural Gas Futures from 4/23/12 – Present (daily charts)… There's a very well defined channel sloping upward.. And right now, NG is trading at the very bottom of the channel.. If the channel holds through March, you have your $4.35.. Save all of the other reasons.. I know this is where you derived your analysis from.. BTW, I am long on NG futures.. Hopefully it holds!