Kaminsky's Call: Why Pains in NatGas May Soon be Investors Gain
Morgan Stanley, Vice Chairman
Natural gas and oil used to be tied at the hip. And with oil rallying, and a brutal winter battering much of the nation, you'd think nat gas would be poised for a rally.
From people I talk to, 2011 will not be the year for natural gas, and for a relatively simple reason: supply and demand.
As Rob Raymond, who runs RCH Energy, a hedge fund that specializes in energy-related investments, (and who has been dead on about natural gas prices), explained on The Strategy Session Thursday, the industry is a "structurally oversupplied market," a trend he expects to last at least "five to ten years".
In plain English, that means nat gas probably isn't going meaningfully higher any time soon.
That overhang has wreaked havoc on nat gas stocks, but that pains could soon be investors' gain.
According to Raymond, the industry should soon begin to see "a lot of consolidation."
That might ultimately restore some measure of pricing power, and perhaps the hopes of natural gas investors.
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