Natural gas prices have been falling since they hit $15.78 back in 2005.
They fell even faster this winter. Bye-bye…
Obviously, this will filter down to the bottom line of natural gas producers.
Many companies that went big on natural gas investments during the boom times are getting hit hard.
Keep an eye out for Exxon Mobile (XOM) and Chesapeake (CHK), both of which are reporting earnings today.
These are the two largest natural gas producers in the United States. Expect earnings to be down 10% from last year.
It might surprise you that 49% percent of Exxon’s energy production is natural gas — not what you might think about the oil giant. And for the record, 89% of Chesapeake’s production is natural gas. But then again, CHK was a leader in the fracturing trend…
Other top producers of natural gas include BP (BP), Anadarko Petroleum (APC), Chevron (CVX), Devon Energy (DVN), and ConocoPhillips (COP).
Sell them into today’s strength. Natural Gas prices won’t go up for at least six months.
Too Much Gas
There is a glut in Natural Gas due to fracturing.
Couple that with a mild winter and the usual summer price drop, and you should stay away from natural gas producers until August — at least.
Prices always fall in the spring and summer and pick up heading into winter.
Producers aren’t making money at these prices. That’s why the drilling rig count has been falling for six straight weeks and is sitting at a 28-month low.
Production is getting slashed.
We are at the point in the cycle when low prices lead to lower production, which will eventually lead to higher prices…
But we aren’t close to the buy point yet.
Oil, however, jumped to $104.80.
Buy the pure oil producers. Buy the natural gas infrastructure plays.
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Worst Housing Market in Recorded U.S. History
President Obama’s office recently put out the Economic Report of the President. On page 102, you will find this chart:
It shows that we are in the worst housing slump in U.S. history, and have at least once more year before we start heading up.
That said, if the small number of previous real estate collapses is any guide, it looks like there is a 40% upside over the next six years.
Gold Jumps on Greek Debt
Gold jumped over the weekend after the European finance ministers signed a deal to give Greece $171.9 billion in loans.
Gold for April delivery was up $30 to $1,756 an ounce. Silver was also up $0.87 to $34.095 an ounce.
The problem with Greece is that its revenue cannot pay for the interest on more loans. Greece is insolvent.
Diluting the euro won’t solve the problem — but it will tend to move the price of gold higher.
And Finally…
Last week, I told you the Nasdaq had broken out and you should buy.
For the record, it’s up 35 points since then.
Today the Dow broke 13,000. Next stop: 14,279.96 — last seen October 11, 2007.
How do you like them apples?
Christian DeHaemer
Check us out on YouTube!Christian is the founder of Bull and Bust Report and an editor at Energy and Capital. For more on Christian, see his editor’s page.
