Re: Natural Gas ~ market folly

Thursday, July 10, 2008

Re: Natural Gas

Just browsing through some reading yesterday and I stumbled upon 2 articles in the Wall Street Journal that had some pretty powerful quotes about natural gas. I intend to do a larger post on natgas in the near future, so for now I'll leave you with some quotes.

Taken from the following article is this quote:

"But one thing seems certain at least—the U.S. is going to need more, not less, natural gas in coming decades, and the rest of the world is, too. That’s bound to make fresh U.S. gas finds all the more attractive."

That quote then linked me to this next article where I found comments regarding world demand for natural gas:

"Prices in the U.S. have risen 93% since late August as power-hungry nations like South Korea and Japan compete in a global natural-gas market that scarcely existed a half-decade ago. Still, U.S. prices are as low as half the level of some overseas markets, suggesting they have much further to rise."

Powerful stuff to say the least. And, it continues to play right into my theses all along: 1. demand for electricity is rising and will continue to rise, and 2. natgas will become a larger component of the energy supply picture.


MattVATech said...

I couldn't agree more, but one small cautionary comment was released by Raymond James some time ago (folks who get it right more times than not), was the oversupply of nat gas in the mid future when depos like Bakken and others eventually come online.

Short term - I'm still WAY BULLISH on the sector but it's something to keep in mind.

Agree or disagree?

market folly said...

oh yea that's always a concern considering there are so many finds these days. its just a matter of time before they all come online.

i think the more important thing to focus on would be whether or not the new demand will outpace that new supply. everyone knows there will be more supply coming, and yet prices continue to go up.

more of something to monitor later as we go along. whats your fav natgas play?

MattVATech said...

Yea we'll have to wait and see if T. Boone's nat gas powered cars takes off more than expected regarding consumption rates. Don't see anything here happening too quickly, but one hurricane or one cold winter could fix that very quickly.

Bought some CHK and XTO early this morning (sold most of it), but also like NBR as a drilling play too.

The sell off last week was total eye candy for me, so I bought like crazy the last two days and starting to lighten up today.

market folly said...

yea i don't actually see us shifting from oil to natgas for cars. that part of his plan is a stretch for me. but at least he's pushing ideas. i'm just a believe in the fact that more natgas will be consumed, in whatever form and for whatever reason.

yea i was tempted to buy CHK yesterday too but since it was closing near the lows of the day i thought it would trade lower the rest of the week.... clearly missed that opportunity haha. oh well. only worry i have with CHK is their hedging. since they are the best hedged in the industry and i expect natgas prices to go even higher, then they will take near-term hits on their EPS. XTO is less hedged so should benefit more. i like them too but dont own any. i still have some chk though. looking at SD and then eventually will add to my UNG as well.