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Is natural gas into a stealth bull market?


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Maybe it is just me but, I have heard very little in the media or from investors about the very strong rebound in natural gas since its sharp nosedive due to the warm weather in December. The upturn has been holding up very strong even during this terrible week.

 

Even the weather is not that cold yet with much warmer conditions than usual this weekend. Maybe that supply and demand will finally work their magic?

 

If this continues, this bodes well for producers and I would say LNG projects. It is counter-intuitive for LNG since you would think that the lower the price the better but, you also need a vibrant upstream to make enough supply available at a price good for everyone, some balance.

 

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Maybe it is just me but, I have heard very little in the media or from investors about the very strong rebound in natural gas since its sharp nosedive due to the warm weather in December. The upturn has been holding up very strong even during this terrible week.

 

Even the weather is not that cold yet with much warmer conditions than usual this weekend. Maybe that supply and demand will finally work their magic?

 

If this continues, this bodes well for producers and I would say LNG projects. It is counter-intuitive for LNG since you would think that the lower the price the better but, you also need a vibrant upstream to make enough supply available at a price good for everyone, some balance.

 

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The only thing that matters for LNG is the cost differential between the exporting country and importing country, after accounting for the cost of liquefaction and Regasification.  If the differential is sufficient, the liquifaction facility will sign long term contracts with upstream players to supply the requisite gas.

 

As I've said on other threads, there are numerous completed but unconnected wells....any rally will be short lived because these wells will be connected as prices rise.  Add to this the sweet spots they have found deep in the Utica, which are yielding the some of the most productive gas wells drilled on the lower 48, and ultimately the result will be short lived rallies as the supply spigot gets cranked open again.

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