April 13th, 2012 
Category: 
That would not be for 2012, Goldman is recommending going long on natural gas in the summer of 2013. The bank sees natural gas prices averaging US$4.00/mmbtu in 2013. Here’s what the analyst said:
“A return to normal winter temperatures next year combined with slower production growth off the declining natural gas rig count will substantially reduce the amount of overall coal-to-gas substitution that will be needed next year, setting the stage for a return to higher prices in 2013,” analyst David Greely said in a research note dated April 11.
We all know natural gas prices won’t stay low forever, after all, the cure for low prices are lower prices. However, for 2012, I expect more pain to come for natural gas particularly in the months of September and October. A mild summer this year would be the perfect storm to follow a warm winter. I would not be surprised at witnessing bankruptcies and massive shut-ins of natural gas production simply because the infrastructure will be clogged with NG. Natural gas prices in both the US and Canada are currently at record 10 year lows, will US power generation save the day? It will depend on the sustainability of the extra 6 BCF/d in demand that appeared earlier this year.
News Roundup
Shell, Asian partners in final talks to build $12-billion LNG project on Canada’s west coast
Kinder plans $5-billion expansion of Trans Mountain oil pipeline
Natural Gas Signals a ‘Manufacturing Renaissance’
Out of Africa (and Elsewhere): More Fossil Fuels
Hybrid owners unlikely to buy another one, study shows
Blog Roundup
Wheat ETF: Harvesting Profits from the Staple Food of Mankind (Agriculture ETF)
What Do You Lose When You Decide to Stop Working for the Man. (Invest it Wisely)
Top-20 dividend stocks for April 2012. (Passive Income Earner)
Bulls vs. Bears: Does the Economy Matter? (Balance Junkie)
Bonuses and Incentives (101 Centavos)
March 2012 Dividend Income Update (My Own Advisor)
Carnival Roundup
The Carnival of Financial Camaraderie #28
Carnival of Wealth, Themeless Edition
Self Directed Investing For Retirement Carnival – Easter Edition
Financial Simplicity Carnival – The Greaster Edition
Yakezie Carnival – Severe Weather Edition
Have a Great Weekend!
You think the glut’s going to dry up soon, Mich? It’s always possible.
Not that soon Kevin, unless power demand REALLY surprises! Need export facilities to come online sooner than 2015…
A couple oil juniors to keep an eye on with regards to the rebound of NG prices in 2013 are: EDE.V and ARW.V. Both companies are currently focused on building oil production, but they are also using that oil production cash flow to stockpile cheap NG targets and existing wells. Edge Resources in particular has developed world class gas exploration techniques and has the pipe infrastructure to turn a profit at prices under 2$/mcf. If the the NG market turns both companies are well positioned for a gold rush; if it doesn’t they keep moving forward with their oil exploration.
I do not follow EDE closely, but I sure would bet on ARW to continue delivering regardless of a recovery in NG. Get ready for September-October period where there will be blood on the streets! (perfect time to pick up a few good ones if you believe Goldman
[...] Beating The Index has commentary on natural goes to along with his roundup, in Weekend Roundup: Go long on Natural Gas, says Goldman [...]
Thanks for the mention Mich.
I can’t believe how dirt low NG prices are. They have to come back eventually, don’t they?
Mark, it is only a matter of time, prices won’t stay low forever. The challenge is identifying that right time to step back in
Do you really need to pick the “right” time? It might be worth it to start easing in and do a little dollar cost (or loonie cost) averaging.
The right time would be the right time frame and for me that’s Q3. We’ll see where natty will be by then.
It is something I am considering as well since NG is so low, it is bound to go higher in the future.
Interesting. Will you be using this information to add to your portfolio?
Sure Buck!