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“Sun Worldwide” believes that the price of natural gas could be about to soar with the onset of the colder seasons in the US.
The Asian-based broker said that the price of gas is now below what it costs producers to extract it and that as many rely upon it to heat their homes in winter, the price may be about to rise sharply.
World attention has tended to focus upon crude oil since it reached an all-time high of $147 a barrel in the summer of 2008. Gas enjoyed high prices, topping out at $13.58 per thousand cubic feet but since then it has tumbled 63% in the past 12 months.
Despite the current surpluses in natural gas inventories, “Sun Worldwide” analysts remain confident that the price will rise if only from a technical perspective once prices close above the $4.30 level.
The analysts believe that consumers in the US may switch to natural gas to heat their homes as heating oil, a derivative of crude, becomes more expensive and world consumption – especially from Asia- rises as their economies emerge from slowdowns.
Many automakers are focusing on producing vehicles that run on LNG (Liquefied Natural Gas) and the continuation of this trend should support long-term investment in the commodity going forward.
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