Keep an eye on natural gas stocks.
Prices just surged above $9 per MMBtu, hitting its highest level in more than a decade. All thanks to falling inventories.
“David Givens, head of natural gas and power services for North America at Argus Media, pointed to three key catalysts fueling the rally: little production growth, high liquified natural gas exports, and storage levels that are roughly 17% below the five-year average,” says CNBC.
Unfortunately, gas prices could push aggressively higher.
All as demand grows faster than supply, which could lead to higher prices, according to the U.S. Federal Energy Regulatory Commission (FERC).
“Compared with summer 2021 levels, total domestic dry natural gas production is expected to increase 3.4% this summer, while total consumption is projected to rise 4.8%, according to a summer assessment prepared by FERC staff,” says Natural Gas Intel.
So, what should investors be looking at?
Cheniere Energy (LNG)
Oversold at $132.66, the LNG stock could see higher highs with rising natural gas prices. Analysts like the stock, too. RBC Capital, for example, just raised its price target to $178 from $151. The firm says, “The company remains well-positioned to benefit from growing demand for liquefied natural gas globally, the analyst tells investors in a research note, adding that in the near- term, given its open capacity, Cheniere should benefit from strong margins.”
JP Morgan just raised its target price to $192 from $183. Wells Fargo raised its price target to $185 from $162 a share.
Tellurian Inc. (TELL)
TELL is involved in the natural gas business worldwide. The company is developing a portfolio of natural gas production, liquefied natural gas (LNG) marketing, and infrastructure assets that includes an approximately 27.6 million tons per annum LNG export facility and an associated pipeline. It owns interests in 11,060 net acres of natural gas assets and 78 producing wells located in the Haynesville Shale trend of northern Louisiana.
First Trust Natural Gas (FCG)
With an expense ratio of 0.60%, the FCG ETF seeks investment results that correspond generally to the price and yield of the ISE-Revere Natural Gas Index. Some of its top holdings include EQT Corp., Occidental Petroleum, Antero Resources, and Devon Energy to name a few.