Every asset class in the world has bounced 40% or more off its bottom. That is, except unloved natural gas. It seems that there is just too much of it.
According to MarketWatch:
U.S. natural gas inventories rose 66 billion cubic feet in the week ended July 17. After the data came out on Wednesday, August natural gas futures fell 2.1 cents, or 0.6%, to $3.772 per million British thermal units. At 2,952 billion cubic feet, stocks were 568 billion cubic feet higher than last year at this time and 458 billion cubic feet above the five-year average.
But today’s news was that job losses were down and housing starts were up. This pushed the Dow Jones Industrial Average out of its sideways trend and kicked in a new bull market.
This speculative demand on a revitalized economy pushed natural gas back up.
Rigzone reported, “In trading on the NYMEX Wednesday, natural gas settled at $3.793 per mmBtu, which is an increase of nearly 9 cents over yesterday. Through the most recent rally, the price of natural gas may crest the $4 mark soon.”
There has been this idea that the big auto companies will restart their plants, along with their parts plants and metal shops, and this surge in demand will suck off the natural gas supply just as the weather turns in the fall.
At any rate, no one wants natural gas these days. The price has bottomed and any positive news will double a number of natural gas stocks.
It’s time to start buying stocks like GMX Resources Inc. (GMXR:NASDAQ), Southwestern Energy Co. (SWN:NYSE), and Chesapeake Energy Corporation (CHK:NYSE).
P.S. There is one stock in my portfolio that loves natural gas. During the last bull market in natural gas in the summer of 2008, this stock went from $1.11 to $8.23 in a matter of months. Read my free outlook on oil.
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