Stay bullish on natural gas says BCA Research, a Montreal-based institutional investment advisory. Their reasons include:

- gas prices have lagged crude oil prices
- rig count still low in Canada due to cost inflation and strong C$
- U.S. production faces high depletion rates and less accessible gas fields
- Asia and Europe bidding up prices of liquefied natural gas (LNG)
- North American LNG facilities unlikely to come on stream before 2011
- natural gas substitutes (e.g. coal) hitting new price highs
- speculators remain net short natural gas in contrast to crude oil

So let’s stick with the gas stocks and exchange-trade funds [ETFs] mentioned in previous posts. The Claymore Natural Gas Commodity ETF is up about 30% since the Feb. 15/08 post Got GAS. The United States Natural Gas ETF (UNG) is up a bit more over the same period. Encana shares have gained nearly 50% since the Aug. 20/07 post, Playing the natural gas cycle. But it looks like there is even more price appreciation coming, according to BCA Research.

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Larry MacDonald

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