Natural Gas: On its way to $5-plus

Sean Hyman (March 4, 2013)

Back when natural gas was trading between $1 and $2 per MMBtu, it was obvious these low prices couldn’t last because the industry’s breakeven point currently sits between $3 and $5. While the low-end breakeven point is $3, the industry average is around $5.

This made me bullish on nat-gas because I knew that the industry would get prices back up to these levels (since they’re certainly not a charity and they do this to make a profit).

Well, sure enough, nat-gas went from the $1 range back to $3 within just three short months. Then, over the next three and a half months it was back over $4. Because nat-gas shot up so far, so fast, it took a breather the following few months to consolidate. But now, it’s time for nat-gas’ next rise.

How far will it go? Its next major push higher should take nat-gas back up into the mid-$4s to $5 at least. Let’s check it out below.

Nat-Gas’ Latest Correction is Over

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Nat-gas has bounced off of its upward sloping 200-day moving average and has now broken its downward corrective line to the upside. Additionally, we see signs of confirmed strength as the moving average convergence/divergence (MACD) below the chart diverged and headed higher even before the nat-gas price started moving higher.

And as far as the relative strength index (RSI) is concerned, we’ve seen an ever-strengthening RSI since December. This indicated that the decline would soon come to an end and the next upward push would resume shortly. That’s the point we’re at now.

Don’t want to feel the sting from nat gas’ rise? Then consider owning a nat-gas stock which will benefit from rising nat-gas prices and also make sure to buy one that has a good dividend yield. Both of these dynamics will help to shield you from nat-gas’ rise.

Have a nice day!

Sean Hyman
Editor, Commodity Trend Alert

Natural Gas: On its way to $5-plus

Nat-Gas’ Latest Correction is Over

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