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Natural Gas Priced for the Future |
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by Tyler Wood
15th February, 2012
The US Energy Information Administration came out with a report last week that showed natural gas inventories fell to 2.888tcf.
However, there is an inventory glut which has continued to be a big problem for natural gas prices and with production still running at all time peaks, most traders are remaining cautious about any upside in price. There has not been enough heating demand across the country to warrant much upside either.
If there is no sign of extreme cold on the horizon, we could see natural gas prices dip below their 10 year low. The huge cushion in inventory after a mild winter could also spell trouble for prices late in the summer stock-building period if inventory owners run out of room to store gas, forcing more supply into the market and force prices even lower.
However, in the longer term horizon natural gas is proving to be one of the most important sources of energy for the US. With the BTU equivalent of approximately $20 per barrel of oil, natural gas has already began to be an attractive export for the US. There just isn't the demand necessary to warrant higher prices domestically.
The demand globally for natural gas, especially in Asia, shows that in the coming years, the export of liquid natural gas will be a tremendous source of revenue for the US and Canada.
Trend following systems like the Diversified Commodity Basket and the Survival Plan offered through Worldwide Futures Systems have been able to take advantage of both the positive and negative trends in natural gas over the years. There are no current positions entered by either of these systems. However, since they trade on weekly bars/trends, the systems may take positions in the coming weeks or months should any major trends be identified.
Natural Gas Chart
Best Wishes,
Tyler Wood
Alternative Investment Specialist
Google Voice: (786) 361-4415
Mobile: (617)-899-6745
Skype: tylerw
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An investment in futures contracts is speculative, involves a high degree of risk and is suitable only for persons who can assume the risk of loss in excess of their margin deposits. You should carefully consider whether futures trading is appropriate for you in light of your investment experience, trading objectives, financial resources, and other relevant circumstances. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
This is provided for informational purposes only. No statement in this blog should be construed as a recommendation to buy or sell a futures/options contract or to provide investment advice. The content provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy and completeness.
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