The Natural Gas Dilemma

After languishing in decade-low prices for much of the last  year, natural gas has emerged as the unlikely best performing commodity so far in 2013, rising 32% from its 2013 low. Last week alone Canadian benchmark prices inched 2% upwards to reach C$3.73 per mcf amid one of the worst commodity routs of the past year. Meanwhile, American Henry Hub benchmark climbed 3% last week and is now 31.3% higher than it was at the start of the year.

TOKYO — Japan Petroleum Exploration (Japex) is taking a 10% stake in an integrated shale gas development and liquefied natural gas (LNG) project being planned by Malaysia’s Petronas in Canada’s British Columbia province. Japex said on Monday it is considering marketing its LNG offtake from the 12 million tonnes per year (mtpy) Pacific Northwest LNG project, worth 1.2 mtpy, in Japan, the world’s largest importer of LNG, which has been increasingly reliant on LNG since the Fukushima disaster in 2011 knocked out much of its nuclear power capacity.

By Energy and Capital: By Nick Hodge In June I told you that "natural gas simply can't stay this low for a litany of reasons."Natural gas prices that week were between $2.45 and $2.60 per million British thermal unit (MMBTU).Reasons gas would head higher included prices already above $15.00/mmbtu in Asia, the fact that winter 2011/2012 was extremely mild, and the reality that it costs companies $5/mmbtu (on average) to get it out of the ground.

Kevin McElroy submits: Right now, oil and natural gas prices are stretched to their limits. Rarely before in history has oil been so expensive while at the same time, natural gas prices so cheap. You can see this price differential in effect by looking at this chart, which divides the price of one barrel of oil by the price of one million british thermal units (mmbtu) of natural gas:

ByAlexander Pottmeyer:With natural gas just under $4 per million British thermal units, it is time to buy this commodity for the long term.

Hedge funds raised bets on U.S. natural gas by the most in more than three months as weather forecasts showed a late-January cold spell that will boost demand for the heating fuel. Money managers increased net-long positions, or wagers on rising prices, by 27 percent in the week ended Jan. 15, according to the Commodity Futures Trading Commission’s Jan. 18 Commitments of Traders report. It was the biggest weekly percentage gain since Oct. 2.

By David White:We are getting close to the "Sell in May, and go away" time of year. They market has had a terrific run up since October of 2011. It is looking tired. The EU situation is looking worse. An EU recession will likely be announced within the next month or two. This situation may drive the overall market downward. What should you invest in?

By StreetAuthority: By James BrumleyTo say that natural gas has been on a roller coaster ride for the past 10 years would be an understatement. Gas prices soared from $1.96 per MMBtu in early 2002 to a peak of $15.78 in late 2005 and back to a low of $1.90 early last year. (click to enlarge)