Nat Gas

[yupyup]

Thoughts on starting to build a long term position in natural gas?

[madcowdisease]

Thoughts on starting to build a long term position in natural gas?

Long term it looks great. There were a couple large finds in N. Alabama a couple weeks back. That supply isn't the best for prices but it is only a matter of time before America adopts technology to power cars with nat gas. Furthermore, Obama is anti-coal. This will cause more powerplants to switch to nat gas in an effort to reduce CO2 & COx.

If we have a hot summer you could very well see an earlier run in nat gas than expected as the powerplants look to nat gas as a surrogate to coal when running at near full capacity to meet the electricity demand.

In sum, if you're holding 5+ years this looks like a great buy to me.

[yupyup]

Thought I would bump this up as Nat Gas is running again this morning.

[yupyup]

Big run up in pm, now pulling back. Any thoughts on a good settling price for nat gas and an entry?

[aiki14]

Big run up in pm, now pulling back. Any thoughts on a good settling price for nat gas and an entry?

How are you playing Nat gas?

[yupyup]

Sorry...looking at the UNG.

[madcowdisease]

Sorry...looking at the UNG.

Yup, if you're looking for a longterm holding to benchmark nat gas, as counterintuitive as it sounds, UNG may not be your best bet. Similar to USO it tends to underperform the commodity due to the constant rolling over of the front month futures contract.

The following thread from last week started by John80 discusses possible nat gas proxies.

http://www.onlinetradersforum.com/showthread.php?t=133518

Personally, I am a big fan of EOG, BBG, CHK, and ATN as stocks that are highly correlated to nat gas due to their overwhelming exposure to the commodity (e.g. they are NOT diversified). ATN has the added benefit of sitting on a huge shale reserve in the mid atlantic region of the United States. I've got to believe when Obama finally unveils his alt energy plans this one will skyrocket.

[chinaman711]

I would avoid nat gas as there is too much inventory out there. JMHO

[madcowdisease]

I would avoid nat gas as there is too much inventory out there. JMHO

You could say the same thing about .CL too but that hasn't prevented speculators from doubling its price this year.

Not that I disagree with your assessment -- it's definitely true -- just saying in this wacky market anything can happen. Cramer did a segment Wednesday about how UNG, with its futures purchases, is a case of the tail wagging the dog and leading the price of nat gas higher due to money flows.

In my opinion long-term nat gas is a winner. Burning nat gas emits less CO2 than coal or oil and Obama and Pelosi are bound to jump on the band wagon once they direct their attention away from healthcare. However, short term, you're going to need some help from the weather in the form of a heat wave to get nat gas really going.

ATN, with its domestic production and fat yield, is a solid long term holding.