Market Overview

The Natural Gas Outlook, Both Long- and Short-Term, is Bullish

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Due to colder-than-normal weather in the United States, the exchange traded fund for natural gas, United States Natural Gas (NYSE: UNG), is up more than 4.5 percent for the last week of trading.

And looking ahead in terms of decades, the International Energy Agency's "World Energy Outlook" offers a bullish long-term future for natural gas.

Due to fracking, the price of natural gas has fallen in recent years,  as vast and previously-unreachable reservoirs have been tapped into by improving technology. The fundamental laws of supply and demand resulted in the price of natural gas falling: in 2011, United States Natural Gas was trading near $50. At present, it is under $18.

With those falling prices, more consumers naturally started using natural gas as a fuel source.

Close to half of all American homes now heat with natural gas. More utilities have switched over to natural gas from coal. Not only was the price more attractive, but natural gas does less damage to the environment than coal.

The IEA''s "World Energy Outlook" sees fossil fuel usage increasing greatly and still dominating the market in the decades ahead. Even with the growth in alternative energy, fossil fuels are still expected to provide 75 percent of the world's energy by 2035. More of that will come from natural gas, as has transpired in recent years.

For investors looking to profit from this bullish outlook for natural gas, both short- and long-term, there are variety of securities to consider.

For a pure natural gas play, there is United States Natural Gas. Companies in various sectors of the natural gas industry include Chesapeake Energy Corporation (NYSE: CHK), Range Resources (NYSE: RRC) and Southwestern Energy (NYSE: SWN). Major oil firms such as Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX) also offer exposure to the bullish forecast for natural gas.

Dividend income from Exxon Mobil, Chevron, Range Resources and Chesapeake Energy Corporation will increase the total return for investors.

Posted-In: Long Ideas News Sector ETFs Short Ideas Dividends Commodities Global Economics Best of Benzinga

 

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