“Natural gas is becalmed through this… It is Walden Pond compared to a hurricane in Florida,” Donald Coxe, head of Coxe Advisors LLC, claimed recently.
The “this” he’s talking about is something that’s been weighing heavily on our minds at Energy and Capital for the last couple of months.
The chart below tells the story well…
The image above shows the steep decline for WTI since August that has sent the markets reeling over the last couple of weeks.
But instead of focusing on this oil price correction, I’d like to give you some good news…
This next chart offers some hope for the months ahead:
It shows the relative stability — what Coxe adroitly calls the “Walden Pond” — for energy investors.
We’re talking about natural gas, and, as you’ll see, its prospects are looking better and better these days.
The Long Game
As the shale boom in the U.S. has sped up over the last few years, one of the victims of its growth has been the price of natural gas.
Yes, the Marcellus shale has been gushing the stuff for the last few years, but the truth is most of the drillers in heavy-hitting formations like the Bakken, Permian Basin, and Eagle Ford have been dropping gas like it’s hot.
When oil prices were still above $100 a barrel back in the summer, companies blasted investors with press releases about how they were working to transition from gas assets into oil.
But now that prices are falling on high supply, it seems natural gas is coming back… and in a big way.
Over the long term, natural gas is going to take over our grid.
New EPA regulations announced this summer and intended to curb the expansion of coal plants are set to go into effect in 2015. They will be a boon to the already healthy growth of natural gas-fired power plants.
Meanwhile, as drillers were selling off gas assets, many manufacturers such as chemical and fertilizer companies were moving back to the United States, where natural gas — a common feedstock for these facilities — has been cheap enough to boost profits.
And at the end of 2015, we will see the first liquefied natural gas exports coming out of Louisiana, with even more to come in 2016 as the U.S. makes its presence felt in Europe, China, Korea, and Japan.
Speaking of Japan, the government there is still tentative on renewing its nuclear program after the Fukushima disaster, so it is clamoring for natural gas and is willing to pay about five times more than we do now in the United States.
Of course, these developments require time and money. But that doesn’t mean we should ignore natural gas until then…
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Short-Term Gains
There are three bullish short-term prospects for natural gas investors right now…
- Panicky oil bears may move into natural gas
- Winter is coming, and it’s bringing the polar vortex
- It’s still October
As oil moves closer to break-even territory for shale producers — somewhere below $70 a barrel — bears are going to switch into full panic mode.
Once they do, they’ll see natural gas has remained relatively stable, and they could move significant sums of money into the natural gas space.
Plus, they’ll see that last winter during the polar vortex, natural gas prices jumped above the $7 per cubic foot mark — even more reason to sell oil investments and pour money into gas.
But — and this is important — it hasn’t happened yet.
That means that there’s still time for you to stay ahead of this trend by buying natural gas before the end of October, while it’s still off most investors’ radars, and wait for it to move higher in November and early December.
Use Energy Volatility to Your Advantage
As these long- and short-term catalysts start shaping natural gas investments in the United States and abroad, you and I can take advantage of the volatility in the energy markets now.
While I put the due diligence in on a couple of juicy prospects (which you can expect to see in the next couple of weeks), my colleague Christian DeHaemer has found a way for us to profit even sooner.
He’s been using a variety of technical indicators such as dojis, Bollinger bands, and press-hype momentum to net recent gains of 62%, 50%, and 292% for some of his subscribers.
Right now, he’s sitting on a natural gas play that’s about to take a ride on some of the factors I’ve detailed for you today.
So if you’d like to see how he’s doing it and get in on his next play before the bears send it higher with a full-blown panic, check out his method here.
Until next time,
Keith Kohl
Check us out on YouTube!A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.
For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.
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