Why This Energy Investor Is Shorting Natural Gas
The natural gas market is structurally oversupplied and, as a result, rebalancing the supply and demand equations can be very difficult, Robert Raymond, principal and founder of RCH Energy, told CNBC’s on Thursday.
"All the producers continue to drill at rates that continue to oversupply the market. I would actually use other precedent, for example the oil industry in the 1980s, the gold industry in the 1980s, where disruptive technologies were introduced to those commodity markets," Raymond said.
"Those precipitated 10- to 20- year correction in those commodity markets. I don't think it's without merit to have to stop and think about what is really going on in the natural gas market and might it take that long to effectively rebalance supply and demand," he added.
For that reason, one of Raymond's strategies is to short natural gas, both through ETFs and directly in the commodity markets.
"The other broad point I would make is sort of divide the world up into the old world and the new world [of disruptive technologies]. In the old world, lease hold and unproven reserves were highly valued in the market," he said.
"This is about lease hold and unproven reserves in a world where the market is oversupplied, where the supply curve has really shifted, it really becomes about cash flow and rate of return," Raymond added.
Follow Strategy Session on Twitter: @CNBCStrategy
Watch CNBC's "The Strategy Session" weekdays at Noon ET.