Natural Gas - I Just Don't See It
With the end of winter upon us, I just don't see the bull case for natural gas this year. There are really 3 main drivers for why that is:
Lower 48 production continues to churn higher despite weakening prices.
Natural gas storage is well above the 5-year average, but more importantly, South Central gas storage is bloated.
Even if power burn picks up this summer, the market deficit won't be enough to push prices back above $4/MMBtu.
I think it's important to distinguish what I mean exactly when I say the "bull case." If you believe that a price rally from $2.27 to $3.5 is the bull case, then I will say there's a good chance this may happen. But if you, like me, are referring to a rally from $2.27 back above $5, then I don't see that happening this year.