Well, if you've been watching, the price has been in free fall lately, as seasonally high levels
of supply have collided with very seasonally low levels of demand. At $2.47 per mcf, gas is
now likely being priced below all-in cost, so more producing wells will be shutting down.
Shutting in gas wells must be done with great care. It is a time consuming process. So, bringing
supply under control takes time. Even so, since this important resource is at a discount to
cost and since gas is trading nearly 40% below its 200 day m/a, I am in patient long side
accumulation mode with the idea in mind that gas will hit $5 per at some point over the next
It is not easy to make money trading gas. I have generally done fairly well buying it below $4,
and with this latest speedy downdraft, gas is as cheap as it has been for a number of years.
there are players out there who will follow, but not likely until gas has turned and entered a
short term uptrend. Fair enough, but since I intend to be patient with this position, I am
doing some now, and for a lark, am using the gas ETF, UNG. Both gas and UNG are displayed
- Peter Richardson
- Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!