The question is “How long will these prices stay there?” Oil was last above $50 on June 29th while NatGas has been above $3 a couple of times in the last few months.
Many traders believe that OPEC is “jawboning” the price higher and the OPEC meeting in November will not lead to any real production cuts. If there are any production cuts, these cuts will be quickly filled by U.S. shale oil producers.
I read a recent article in the WSJ stating the Saudi economy is hurting. The kingdom just paid construction companies bills that were months old. The situation was so bad that workers for these companies had not been paid in months.
All indications are that the consistent low price of oil is beginning cause some hardships in the kingdom. Consequently, the Saudis are losing its leverage in the global pricing of oil.
You may not be aware of the fact that Saudi Arabia is planning on doing an IPO for its Saudi Aramco oil company. A NY stock trade told me that the IPO is an indication that they kingdom is running out of oil which is the reason for the IPO.
The price of NatGas is really not affected by the price of oil anymore. The NatGas pricing decoupled from oil years ago. Many traders and forecasters think NatGas prices will stay in the $2.75 to $3.00 range for a while and will probably go higher if it’s a cold winter. Good news for the producers in the Marcellus and Utica.
This is very fluid situation. We’ll keep you updated.