Kaminsky's Call: Why Pains in NatGas May Soon be Investors Gain
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.
Follow Gary on Twitter: @CNBCStrategy
Watch Gary Kaminsky weekdays at Noon ET on CNBC's "The Strategy Session."
Gary Kaminsky does not hold any equity positions.
The content of this blog is published in the United States of America and persons who access it agree to do so in accordance with applicable U.S. law.
All opinions expressed in this blog are solely the opinions of Gary Kaminsky and do not reflect the opinions of CNBC, NBC UNIVERSAL or their parent company or affiliates, and may have been previously disseminated on television, radio, internet or another medium. You should not treat any opinion expressed by Mr. Kaminsky as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Mr. Kaminsky’s opinions are based upon information he considers reliable, but neither CNBC nor its affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Kaminsky, CNBC, its affiliates and/or subsidiaries are not under any obligation to update or correct any information provided on this website. Mr. Kaminsky’s statements and opinions are subject to change without notice. No part of Mr. Kaminsky’s compensation from CNBC is related to the specific opinions he expresses.
Past performance is not indicative of future results. Neither Mr. Kaminsky nor CNBC guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment discussed on this website or on the show. Strategies or investments discussed may fluctuate in price or value. Investors may get back less than invested. Investments or strategies mentioned on this website or on the show may not be suitable for you. This material does not take into account your particular investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. You must make an independent decision regarding investments or strategies mentioned on this website or on the show. Before acting on information on this website or on the show, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.