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Nat Gas Investors Gauging Pricing Impact Of Fickle Winter Weather

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Nat Gas Investors Gauging Pricing Impact Of Fickle Winter Weather

Natural gas investors got an unexpected boost in the past two weeks as a series of late-winter storms and falling temperatures in many parts of the country helped draw down a bit of natural gas storage overhang. While there’s always the chance of another surprise cold spell, Deutsche Bank analyst Josh Silverstein is now turning his attention to the warmer summer weather. According to Silverstein, the winter storm certainly helped the outlook for natural gas prices, but it may have been too little too late.

'Damage Has Been Done'

“The damage has been done though, following one of the warmest Jan-Feb periods that saw the earliest build on record (+7Bcf, Feb24 week), and with the low demand shoulder season approaching and supply growth starting in 2H17, summer demand is now up to bat to reduce the potential of a price collapse,” Silverstein explained.

Deutsche Bank has lowered its 2017 natural gas price forecast from $3.15/mmbtu to $2.95/mmbtu.

In terms of infrastructure, the approvals of the huge River and Atlantic Sunrise projects were certainly good news for the natural gas market. Looking ahead, Deutsche Bank will be watching for a potential approval of the Constitution pipeline as well.

So far in 2017, the United States Natural Gas Fund, LP (NYSE: UNG) is down 20.6 percent and the VelocityShares 3X Long Natural Gas ETN linked to the S&P GSCI Natural Gas Index Excess Return (NYSE: UGAZ) is down 57.3 percent. The VelocityShares 3X Inverse Natural Gas ETN linked to the S&P GSCI Natural Gas INdex Excess Return (NYSE: DGAZ) is up 48.3 percent year-to-date.

Related Link:

Nat Gas Bears Admit There Could Be Some Upside This Summer

Posted-In: Deutsche Bank Josh SilversteinAnalyst Color Specialty ETFs Commodities Markets Analyst Ratings ETFs Best of Benzinga

 

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