UNL - The Bullish Outlook For Natural Gas Continues To Improve
2024-05-21 04:15:00 ET
Summary
- The fundamental outlook for natural gas has improved dramatically in recent months. The drop in production has brought total supplies back to much more favourable levels.
- However, prices have rallied hard in recent months and positioning is becoming stretched. We are also likely to see a production response from producers over the coming couple of months. These dynamics will likely put a cap on prices in the near term.
- Looking forward into 2025, should we see US production growth disappoint come 2025 (my expectation), coupled with the continued rise in LNG export capacity, there appears plenty of upside for natural gas prices and equities over the coming 12-24 months.
- A colder-than-normal winter would only add fuel to the potential fire for a bull market in natural gas.
The bull case for natural gas in building steam
Slowly but surely, natural gas prices are finding their feet. Not only have front-month futures rallied ~50% since bottoming out in February, but the bullish backdrop for natural gas prices over the coming 12-18 months continues to move in the right direction. This should be very supportive of prices as we exit 2024 and enter 2025....
The Bullish Outlook For Natural Gas Continues To Improve