Anyone else here onto this? Am I crazy or is this an amazing opportunity? What I am seeing here is that first, the actual production and supply in the USA is starting to be significanlty restrained. One source of the restraint is the losses that the drillers have experienced during the past ten years on account of oversupply and low prices. A second is the increasing cost of money as the Federal Reserve gradually increases interest rates. A third restraint, probably the most critical right now, is the result of NIMBY's combining forces with environmentalists to block the construction of new pipelines to carry off the new production which is happening in places like the Marcellus, the Utica, and the Permian. A fourth, subtle, restraint is public predictions by such agencies as the EIA and others, that natural gas production is going to sharply increase over the next few years like it has been increasing in the past ten years.
So what is actually happening, at least for the past 12 months, is that production in the USA is actually flat. Meanwhile, on the demand side, total demand continues to increase by 5% to 10% per year. Sabine Pass started LNG exports last year and Cove Point joined in this past season. New fertilizer production along the Gulf Coast and also in Iowa are sharply increasing demand. Coal and Nuclear plants continue to be shut down and although the media, and reddit, keep on blaring daily articles about wind and solar panels, its mostly hot air and the real new demand is falling upon natural gas to take up 95% of the slack. Also, the predictions for warmer and warmer winters have not, in fact, occurred so just as much natural gas has been needed for heat and electricity in the winter. On the other hand, so many people have relocated to warmer places like Florida or Arizona or Nevada so that new air conditioning demand is off the chain.
So the result is that, in the USA, demand for natural gas has increased remarkably but supplies have not. The current inventories of natural gas, always seasonally lowest at this time of year, are the second lowest since I started watching over 10 years ago.
And to top everything, now everyone is trading in index ETF's instead of individual stocks, I am seeing pure natural gas company stocks plummeting with the price of crude oil right now, even though natural gas spot prices are hitting their yearly highs today.
anyone else seeing a golden opportunity here? I'm about ready to take out a second mortgage just to buy more ....
Submitted May 25, 2018 at 08:55AM by knotty-and-board https://ift.tt/2LrBMvw
