Don't let the recent slide in natural gas fool you. This is a strong market with dynamics that have changed immensely over the past year.
The main reason that the market has been strong is that the rig count for natural gas has hit an 18-year low. Now, plenty of fracking is going on around the country, but the oversupply that we enjoyed just a few months ago is gone. Blame that on a winter that never seemed to end.
The second reason is one that I am sure everyone is well aware of: There are more uses for natural gas: from cities converting their buses and utility vehicles, to truckers retooling their rigs to run on nat gas instead of diesel, to coal-fired electrical generating plants being converted to natural gas.
The recent slide is a result of us being between seasons. In this time of year, natural gas is not widely used for cooling or heating, so demand is lower. But make no mistake—as soon as the weather heats up, look for the natural gas market to do the same.
I am looking to buy nat gas at $3.88, and I would buy more at $3.75. On the upside, once we trade above $4.20 again, look for a move up to $4.50.
