The rise in natural gas prices this month is a welcome sign for investors, especially after months of enduring a slow and painful drop in the value of North America's most exclusive commodity.
After falling as low as $2.50 per mmbtu on September 3, natural gas futures have risen to $3.65, an increase of 46%, that has given most natural gas stocks a huge lift over the past few weeks.
Blackmont analyst Gord Currie told clients on Wednesday that the change in momentum is likely to continue moving forward, even though underlying fundamentals remain weak.
He wrote in a research note:
Short-term gas prices are largely driven by the amount of gas in storage, and the inventory numbers still point to lower prices until the end of October, which marks the end of 'injection' season.
Investors, however, are clearly looking 'across the valley' to the winter months when cold weather will stimulate demand for gas and when economic growth is expected to return to North America.
Although natural gas stocks have rallied nicely, the analyst said there are buying opportunities still available. In the intermediate space, he likes NuVista Energy (OTC:NUVSF) and Celtic Exploration best, while junior producers such as Anderson Energy, Angle Energy and Sure Energy also offer good value.