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Dan Dicker

Dan Dicker

Dan Dicker is a 25 year veteran of the New York Mercantile Exchange where he traded crude oil, natural gas, unleaded gasoline and heating oil…

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The Natural Gas Play To Start The Year

For most of 2016, we searched for value in oil stocks, while ignoring natural gas. But while I believe oil stocks will have a great 2017, I also see terrific value coming in natural gas stocks at various times during the coming year. One of those moments, I believe, is now.

We had an interesting end for natural gas in 2016, as prices spiked overseas, sent higher with the intensity of the cold weather in Europe. While the Arctic has experienced one of the warmer starts to winter on record, that has been balanced by the historic cold that began in the Russian Siberian plains and has been sweeping westward through Eastern and Western Europe. The big move upwards in European natural gas, while it should have limited effect here in U.S. markets, did instead inspire quite a strong influx in speculative buying towards the end of the year, marking one of the most overall bullish positionings in U.S. natural gas futures we’ve seen since at least 2014.

(Click to enlarge)

I say this is all interesting, because it never fails that markets will look to respond negatively to a majority position, even if the fundamentals are very strongly in their favor. Sure enough, natural gas took a major dive starting on Tuesday, and continuing through Thursday, as markets punished those traders who thought that the strong coming of winter in Europe would translate into $4/mcf + prices in February here in the U.S.

(Click to enlarge)

I continue to call…

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