5 Reasons Natural Gas Is Poised for Upside

From Bill Powers and Keith Schaefer….

This last week before Labor Day marked the 2009 low for natural gas prices. Both the natural gas price and natural gas stocks had a big run through to January 2010, creating great wealth for investors. Could that happen again this year? How real is the seasonal trade in natural gas? And how does the natural gas market compare this year over last?

This chart, published by www.rigzone.com (they have one of the best daily free e-letters in the industry) shows how well the big seasonal trade worked last year, and how it has fared for the last 10 years.
Looking at this year, 2010, we have on the positive side:
Storage is Trending Lower:
The EIA reported that for the week ended August 27, 2010 working gas in storage was 3,106 billion cubic feet (bcf), only 54 bcf larger than the prior week. U.S. storage is now 208 bcf less than last year at this time and 169 bcf above the 5-year average.
More importantly, storage injections have been below the 5-year average for 11 consecutive weeks and this trend is set to continue. Gas storage could end the refill season on November 1st at approximately 3,500 bcf. This level of storage heading into the winter heating season supports substantially higher natural gas prices.
2. Demand Continues to Strengthen:
According to the EIA demand for the first 6 months of 2010 was approximately 4