There are two trends in the Canadian energy patch in the last three weeks that have been making money for investors — but the question is, do they have legs? Can the uptrends continue?
The first and most obvious is natural gas. After doubling in price between April 2012 and November, it dipped down to $3.20/mcf (thousand cubic feet) in early winter. The winter just wasn’t as cold as normal… though colder than last year.
(weekly chart via Stockcharts)
But fast forward to March 2013 and colder weather has gripped much of the high population areas of the U.S. east coast and the Chicago area. U.S. natural gas storage levels reflect this chill: overall U.S. storage levels are now below 2 tcf, and the year-over-year deficit is 440 bcf.
As a result, gas jumped back up to over $4/mcf, and has taken the chart of many natural gas producers with it. The futures strip shows the market anticipates gas prices above $4.00 from July forward.
Can it last? The pros I talk to in Calgary dismiss this bump, saying shoulder season is coming in April/May and the North American gas price, along with all the good looking Canadian stock charts it has created, will droop then.
The Canadian arm of brokerage firm Raymond James has a slightly more bullish interpretation:
…..read more HERE