Natural Gas Futures News, 5/19/15: Natural gas prices fell sharply today (Tuesday) during a month that has seen a huge rally in the energy sector.
By 1:10 p.m., natural gas futures were down 2.39% at $2.99 per million British thermal units (BTUs). Prices have seen a 5.6% gain in May so far, despite a 3.1% pullback during the first full week of the month. Futures hit $3.07 on May 15, the highest level since mid-January.
The natural gas futures news comes on speculation that the Energy Information Administration's (EIA) weekly report on Thursday may show above-normal supply gains. Based on the average of three analyst estimates compiled by Bloomberg, the report could show that gas stockpiles increased by 99 billion cubic feet last week.
"It will be interesting to see if the $3 level can survive the inventory number," Bob Yawger, director of the futures division at Mizuho Securities, told Bloomberg. "The market is looking for something close to triple digits, which would be a pretty big number for the week."
In its monthly Short-Term Energy Outlook, the EIA said gas production could rise 6% to a record 79.22 billion cubic feet a day. Output from the Marcellus shale formation - the largest gas reservoir in the U.S. - may increase to 16.74 billion cubic feet a day next month.
But today's natural gas futures news is just a short-term pullback. According to Money Morning's Global Energy Strategist Dr. Kent Moors, demand will outpace supply in 2015, especially once the U.S. starts exporting liquefied natural gas (LNG).
"From the rise of liquefied natural gas exports to both Europe and Asia to the transition well underway from coal to gas in the generation of electricity, the ability to produce more unconventional gas is being met by a rise in the demand curve," Moors explained in October 2014.
And that growing demand is a major catalyst for our favorite natural gas stock...
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According to Moors, analysts thought the U.S. would need LNG imports to meet 15% of its gas needs within the next five years. Instead, the U.S. should provide between 8% and 12% of worldwide LNG exports by then.
Now that the U.S. Department of Energy is finally letting companies export, there will be plenty of opportunities for investors to get a piece of the global trade.
"There is a range of profitable moves about to hit," Moors said last October. "Natural gas normally doesn't have the sizzle that crude oil has among investors. Of course, making money tends to change that real fast."
Moors' favorite pick in the sector is up 629% since he first told readers about it in November 2011. It was the first company to receive government approval to export to countries that don't have a Free Trade Agreement with the United States.
The company is Cheniere Energy Inc. (NYSEMKT: LNG).
When Moors first recommended Cheniere, he said it would increase in value with every contract signed. It's already inked five 20-year export contracts with importers in Europe and Asia.
Here's a detailed breakdown of LNG stock's profit potential...
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