Natural Gas in 08`…

The NYMEX Henry Hub Natural Gas contract have risen 25% on the year on news of tightening supply coupled with rising demand and cold snap storm worries. According to inventory reports, Nat Gas supplies are down 14% year-over-year and up only 2% from the five year average. Recently the Department of Energy estimated that 2008 natural gas demand in the U.S. was 63.53 billion cubic feet (bcf) per day, a little less than the 63.60 (bcf) per day of estimated new supplies (including imports). Moreover, recent news of a cold front to hit the Northeast and the Midwest next week will put upward pressure on prices. Furthermore, technically speaking, Natural Gas has some upside left in the short term. In the mid-term, prices will come down due to the number of new projects and pipelines coming online, increasing supply. Now, looking long-term, I think Natural Gas is a fuel of the future and has tremendous upside potential.