Natural Gas: Opportunity of the Year?

It's difficult to imagine that this energy commodity could offer a promising opportunity for profit when you observe its performance across different timeframes, including yearly, half-yearly, and even year-to-date. Below is a chart displaying its performance over the course of one year.

NG Futures 1Y Performance


Natural gas futures have performed the worst among all commodities on the mentioned timeframes, losing 73% of their price in one year. They are almost double the percentage loss of the next worst-performing commodity, oats futures.

The chart below sheds light on the poor performance of natural gas futures. Continue reading "Natural Gas: Opportunity of the Year?"

Natural Gas Opportunity For Savvy Investors

On August 31st, Russia's state-owned energy company, Gazprom, stopped the flow of natural gas in the Nord Stream 1 pipeline. The pipeline ran from Russia to Germany and was scheduled to be discontinued from August 31st until September 3rd. But September 3rd came and went, and the pipeline remained shut down.

At first, an oil leak was reported, causing the pipeline to remain shut down. But then, it was evident that the shutdown was in retaliation to the sanctions the West had implemented against Russia due to the war in Ukraine.

Many experts predict the economic pain in Europe will increase as the cold weather sets in across the continent. Some have gone as far as to say that the economic pain will be felt in both the coming winter and next winter, 2023-2024. Some are even saying that energy rationing will be required to ensure everyone has enough natural gas for heating.

However, many in Europe have been planning for this to occur for some time. Russia had reduced the pipeline operating volume to just 20% of what it could provide.

This was far less than what Europe comfortably needed to make it through winter. Thus, the European Union and other entities have been working on replacing the lost volume through other means. So while the pipeline shutdown is not ideal, it was predicted to happen at some point this winter.

Many are saying Russia is attempting to weaponize its gas supply to hurt the EU and other nations in an attempt to have Western countries drop or reduce sanctions against Russia.

At this time, there is no sign that either the EU or Russia will bend to the will of the other, and it is likely that we will continue to see elevated oil and gas prices in Europe. Thus, comes the opportunity for savvy investors.

I want to note that I am not condoning an attempt to profit from someone else's pain and suffering. I want to point out the high likelihood that natural gas prices will likely increase this winter as the EU finds ways to replace the gas they acquired through the Nord Stream 1 pipeline.

With that all said, let's look at a few of the options you have if you want to invest with the idea that gas prices will rise this winter. Continue reading "Natural Gas Opportunity For Savvy Investors"

Chesapeake Energy All in on Natural Gas

Forget oil—the real money is in natural gas.

Or at least that’s the message coming from a pioneer of the U.S. shale revolution, Chesapeake Energy (CHK).

From Prince to Pauper to Prince Again?

Once upon a time—when its stock was valued at more than $35 billion and its CEO, Aubrey McClendon, had the biggest pay package of any CEO of a listed firm—Chesapeake Energy was America’s best-known fracker.

But those glory days disappeared quickly, and Chesapeake became the poster child for the shale sector’s excesses.

About a year and a half ago, in the autumn of 2020, Chesapeake was in the midst of bankruptcy proceedings after the coronavirus pandemic-led crash in energy demand proved to be the final straw in the company’s fall from grace.

And for the industry more broadly, the prospects for liquefied natural gas (LNG) exports were looking bleak after a $7 billion contract to supply the French utility Engie went down the tubes on concerns over the emissions profile of U.S. natural gas.

Fast forward to 2022 and the picture has changed dramatically. Natural gas exports are booming!

Thanks to the Russian invasion of Ukraine and subsequent sanctions, Europe is in the middle of an energy crisis. It is buying up as much American LNG as it can. Those concerns about emissions are long forgotten.

In the first four months of the year, the U.S. exported 11.5 billion cubic feet a day of gas in the form of LNG, an 18% increase from 2021. Three-quarters of those exports went to Europe. And European leaders have pledged to ratchet up their imports by the end of the decade. There is also a massive opportunity in Asia, where LNG demand is set to quadruple to 44 billion cubic feet a day by 2050, according to a recent report released by think-tank, the Progressive Policy Institute.

And even here in the U.S., natural gas supplies look set to be tight this winter. Hot summer weather and high demands for power generation are sucking up supplies and leaving storage precariously low. Continue reading "Chesapeake Energy All in on Natural Gas"

Chart Spotlight: Tellurian Inc. (TELL)

Natural gas prices are exploding.

For one, Russia said it would cut natural gas shipments to Europe.

In fact, as noted by Barron’s, “Russian company Gazprom said on Monday that it will cut natural gas shipments from the key Nord Stream pipeline to Germany starting this week. The pipeline’s exports will be cut to 20% of capacity, down from 40%, because of a sanctions-related issue with turbines serving the pipeline.”

Two, there are drought conditions in the U.S., and a heat wave forcing millions to turn up their air conditioners to full blast.

Three, according to EQT CEO Toby Rice, as quoted by Barron’s, “In the United States, we’ve got the natural gas here, we’ll be fine. But you think about our allies in Europe, and the tremendous power and influence that Russia has on these countries. Clearly, we need to take away the gun, and provide the energy to our allies around the world.”

All could create a big opportunity for natural gas stocks, like Tellurian (TELL).

Tellurian – a $2.1 billion company – is “building a low-cost, global natural gas business, profitably delivering natural gas to customers worldwide.”

Better, the company could benefit from a substantial shortage of natural gas.

In fact, according to its latest investor deck, geopolitics and energy security providing a step change in global LNG demand. Tellurian notes there’s (1) underinvestment in energy and post-CV structural growth have collided with a geopolitical crisis; (2) A need to replace 20 Bcf/d of Russian gas to Europe, equivalent to ~35% of the world’s LNG market; (3) Natural gas shortage expected to lead to catastrophic consequences.

Technically, according to MarketClub, shares of TELL are slightly overbought. The MarketClub Smart Scan also gives the stock a score of +60, which tells us at the moment, the stock is struggling to move in a solid trend.

However, with natural gas prices showing no signs of cooling off, I’d like to see the stock run from a current price of $3.68 to $5, near-term.

The MarketClub Trade Triangles are also mostly green.

While it’s telling us that the longer-term trend has been down over the last month, the intermediate trend has been strong since mid-July. In addition, the short-term trend, according to Market Club, has been up since mid-July as well.

TELL Chart with Trade Triangles

Source: MarketClub

Ian Cooper Contributor

The above analysis of Tellurian Inc. (TELL) was provided by financial writer Ian Cooper. Ian Cooper is not a Registered Investment Advisor or Financial Planner. This writing is for informational purposes only. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Ian Cooper expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.

Some Are Expecting "Rolling Brownouts" Or "Blackouts"

“The following is an excerpt from Tim Snyder’s “Weekly Quick Facts” newsletter. Tim is an accomplished economist with a deep understanding of applied economics in energy. We encourage you to visit Matador Economics and learn more about Tim. While there, you can sign up for his completely free Daily Energy Briefs and Weekly Quick Facts newsletters.”

Brownouts and blackouts are terms that describe the gradient of power loss, from limited in scale and time and transitioning to total darkness, with no idea of when the loss of power will subside. Valentine’s Day week 2021, Texans were told that ERCOT had not prepared for the deep cold that centered on Texas, and reserves for fueling power plants either were stuck in frozen pipes or just were not available. As a result, 151 people lost their lives due to exposure or other related effects of that storm.

This week, as we begin the first full week of June, we hear those same words, but this time we’re hearing them for the entire country. We all are asking how can we be here again and when will it happen? We’ll address these today in this article.

Let’s start with some perspective. On January 1, 2020, the futures price for Natural Gas was $2.1890 per MMBtu (million Btu). President Biden took office on January 20, 2021, and the price for Natural Gas was $2.5460 per MMBtu. On January 1, 2022, the futures price for Natural Gas was 3.7300 per MMBtu, and Tuesday’s closing price for Natural Gas was $9.293 per MMBtu.

Let’s look at a graph: Continue reading "Some Are Expecting "Rolling Brownouts" Or "Blackouts""