Saturday, September 22, 2007

Unloved Natural Gas

Contrarians should consider investments in the natural gas sector.

After a mini-mania in 2005 as hurricanes temporarily crushed supplies, natural gas prices have settled into a broad trading range and have disappeared from many investors’ radar screens. Sentiment has been extremely negative in the past 18 months, similar to the environment early in the decade, even though prices are well above the levels seen in 2001. Industry investment plans have been steadily pruned, which should ensure inadequate supplies down the road given the relentless uptrend in demand. Thus, the contrary call is to be bullish from a long-term perspective. Temporary weather and hurricane effects aside, we expect prices to grind higher in the coming years.

Article taken from BCA Research

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