A Weekly Analysis of Energy Stocks

More European demand for liquefied natural gas cargos is positive for buy-recommendations from Cimarex (XEC) to Gazprom (OGZPY.PK) among natural gas producers. Natural gas tankers have been unloading in the U.S. in record numbers in 2007 while the price was higher here than in Europe. That has changed in the past few weeks with U.K. near-month futures near parity with U.S. near-month futures (see Chart UK/US Natural Gas Futures).

The latest quote for the National Balancing Point in August of 30.9 pence a therm translates at $2.06 a pound to $6.35 a million btu, and exceeds the New York Mercantile Exchange (Henry Hub) futures at $6.03. Japan also needs more natural gas because a recent earthquake shut down a sixth of the country’s nuclear power according to Platt’s Oilgram.

The global factors may be helping six-year natural gas price hold above the 40-week average despite daily market volatility (see chart Six-Year Commodity Price Meter). Contrary to short-term prices, six-year natural gas is advancing relative to six-year oil lately (see chart Six-Year and One-Year Natural Gas Futures).

Originally published on July 24, 2007.