winter season

The arguments against natural gas are old.

The bearish headlines, the bears took the most hated commodity down too much, too soon.

Inventories are high. It’s unseasonably warm. It’ll never work out, I was told in an unseasonably warm December 2014.

Then it happened. It got cold.

And natural gas spiked 18% higher. And I still believe there’s further upside remaining.

Sure, natural gas is one of the most hated commodities, as oil falls out of the sky.

But it has an historical tendency to bounce off the same levels most years. In 2009, natural gas plummeted to just under $2.50. Later that year it ran up to a high above $6.00. In 2010, after finding a bottom at $3.25, it ran to $4.60.

In 2012, after bottoming out just under $2.10, it rallied to $4.40.

In 2013, after a long slide it finally found support at $3.25 natural gas rocketed to highs of $6.50.

We saw the same thing happen all over again now, as it got colder before natural gas turned higher again recently.

In fact, while parts of the west, may see above average temperatures, the Climate Prediction Center is “suggesting that the eastern two-thirds of the U.S. will experience below-average temperatures toward the end of January and beginning of February, with a significant arctic intrusion possible,” according to Weather.com.

Any cold blast could send natural gas prices higher, especially if we see a big draw on inventory. Keep an eye on it.

 

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