Time to Buy Natural Gas

Struthers Resource Stock Report (06/11/2009)
"I have commented a number of times in the past few months that I am bullish on Natural Gas. It is way oversold and prices cannot stay at these levels. The price is far below cost of production and gas producers have severely scaled back their drilling and development. At some point and probably sooner or later, supply is going to fall off much faster than demand. I can't recall for quite some time where so many bullish factors were lined up in any market or commodity, yet the price languishes.

This is truly a unique opportunity to make some bid money with low risk.

I think this could also be a good place to hide from another market correction, or a place to put some of our cash into.

The weekly chart points out the decline in Natural Gas prices and also shows we have been bouncing along a bottom that seems to be put in the $3.50 to $4.00 range. Nat Gas prices have always bottomed and never gone any lower than a range between $2.00 and $3.50.

In other words the worst case - downside risk is small from the current $3.70 price.

Just like the oil futures market was pricing in much higher prices when oil was $35 to $40 and now close to $70, Natural Gas is doing the same now!

The futures are pricing gas at over $6.00 by the winter heating season The 6 month forward premium is now at 65%. If prices only move up to where futures are predicting, we are looking at 65% in 6 months, pretty good in my books.

And looking at the chart, there is really no resistance until we get up to the $6 level."

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