Its Too Early to be Bullish on Nat Gas

December 23, 2010 12:16pm by Barry Ritholtz

I mentioned last week that we like the Energy sector, particularly Oil and Coal. The two stocks mentioned Arch Coal (ACI) and SunCor (SU).

Several people tagged me to ask about Natural Gas.The bullish argument is rising oil prices will drag Nat Gas with it.

The bear case, however, is controlling at the moment. Given the huge new finds in both shale rock frac-ing and Barnett and Haynesville finds, along with the Marcellus find, makes the fundamental supply story bearish. North America has a ~200 year supply of Nat gas.

The technicals are even worse: Nat Gas still in still in a deep downtrend (red line) – only a move above $4.60 (purple line) would suggest the secular bear move is over.

Chart courtesy of FusionIQ

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