NG ETF’s: There’s A Major Wipeout Coming In The Natural Gas Business
“Investors in natural gas stocks have lost their minds. They’re about to lose their wallets, too…There’s a major wipeout coming in the natural gas business. North America has too many natural gas producers. The industry needs a major cleaning out. The most inefficient, high-cost producers must fold. This will bring supply and demand back into balance,” Tom Dyson Reports From Stockhouse.
The Energy Information Administration says U.S. natural gas inventories rose again last week. They are now a just a chip shot from the record high hit in November 2007. Natural gas storage in producing regions – including Texas, Louisiana, and Oklahoma – already reached a record high last month. Aubrey McClendon, CEO of Chesapeake Energy, the largest independent gas producer in America, figures America’s natural gas industry will fill up all available storage by the end of the year. There’ll be “involuntary curtailments,” he says.
“In the last two years, the price of natural gas has fallen almost 70%, yet natural gas stocks are still trading at almost the same prices. In other words, investors in natural gas stocks have totally ignored the huge collapse in natural gas prices. This chart compares (UNG), the exchange-traded fund (ETF) for natural gas (in black), with (XNG), the AMEX index of natural gas producers (in blue). XNG is an index of natural gas producers like Chesapeake, Devon, Anadarko, and Apache,” Dyson Reports.
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