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Natural Gas: Prices Showing Signs of Recovery

Published 05/03/2024, 02:59 AM
Updated 05/27/2024, 01:10 PM
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Are there signs of a recovery in gas prices?

Natural Gas Futures - Jun 2024 U.S. reached a one-week high at $2.06/MMBtu in anticipation of increased demand.

This is due to an increase in the amount of gas used at the Freeport LNG export facility in Texas. On Monday, the amount of gas used reached its highest value in three weeks, 12.9 bcfd compared to 12.2 bcfd the previous day.

This suggests that at least one of the three liquefaction trains is back in operation after a period of interruption.

The natural gas injection season has just begun.

The annual gas storage process is divided into two distinct phases: gas injection into the reservoir, which takes place during the spring and summer (April 1 to October 31), followed by delivery during the fall and winter (November 1 to March 31 of the following year).

Gas producers have recently turned off the taps on major extraction fields, leading to a decrease in production. This could have a significant impact on the future of the gas industry and energy markets in general.

To achieve a sustainable recovery in gas prices, there needs to be a gas deficit. This means that demand exceeds supply and there is a shortage of gas in the market.

Only under these circumstances will we be able to see an increase in gas prices in the long term.

At the moment, a deficit storage situation is unlikely to occur by November.

However, as is often the case in the natural gas market, prices and weather conditions will have a significant impact on storage demand. With the upcoming summer likely to be warmer than usual, we expect demand for electricity to increase.

This year has been difficult for the gas industry, but there are hopes for a return to normalcy by the end of the year.Antero Resources Table

If producers continue on the path of reducing production, we are likely to fall back into a balanced storage scenario.

Our investors who have used INVESTING PRO this year have been able to avoid losses in the natural gas market, which has made minus 60 percent in six months. How? By simply following the strategy of buying the best gas producers instead of investing directly in futures.

This demonstrates how INVESTING PRO can be a useful tool to protect your investments and maximize profit opportunities.

Investing pro is a smart financial advisor that helps us identify the best investment opportunities in the industry. One of the most prominent gas distributors is Antero Resources Corp (NYSE:AR).

In my previous article, INVESTING PRO indicated that the stock was undervalued at $25, an assumption also confirmed by my research.

The company, which is involved in the production of natural gas, has experienced significant growth in recent months and is currently trading at $34.

One of the reasons many people buy natural gas is seasonality. But as I often repeat, there are no magic formulas, and understanding or exploiting seasonality is useless and only leads to wasted time and money if you do not have a solid understanding of fundamental analysis.

We look forward to seeing you in the next article! And remember, for successful trading always rely on Investing Pro: an indispensable tool that can help you avoid serious mistakes during your trades.

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