Natural Gas Prices Rally: What the... Frack?

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Natural Gas Prices Rally: What the... Frack?
Why Energy Specialty Service turned near-term bullish natural gas in mid-April -- just as all the "fundamental" arrows were pointing DOWN.

By Nico Isaac
Thu, 17 May 2012 05:00:00 ET

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(Editor's Note: Natural Gas prices have gone on to rally as much as 35% since the April low. Posted May 17)

What is the universal badge of any truly consistent financial analyst?

Skill?
Experience?
Technique?

No. It's discipline, the ability to stand beside your interpretation of a market's trend even as the opposing, gale-force winds blow against you.

Let's take the recent performance in natural gas, for example. Back in mid-April, natural gas prices were circling the drain pipe of a 10-year low. And, according to the mainstream experts, the market's upside was pinned under one giant bear claw thanks to hydraulic fracturing, or "fracking."

Here, the following string of April 19 news items capture the bearish mainstream expectations for natural gas's near future:

Natural Gas ETF UNG is named "One of the 5 Worst ETF Investments Ever." (Market Watch)
"Unrelenting Bear Market Continues For Natural Gas" (Associated Press)
"At this point there isn't anything new to say about natural gas. Most of the investing world has lost hope that it will recover anytime soon... The overarching theme of the market is still bearish." (Reuters)

But, right around the same time, according to EWI's Energy Specialty Service, there was indeed "something new" to say about natural gas: Namely, it was time to turn bullish.

On April 20, Energy Specialty Service's intraday analysis of both Natural Gas futures and UNG set the stage for a meaningful rally via these timely insights:

For natural gas futures, Energy Specialty Service wrote on April 20:

"The key point is that the evidence (i.e. oversold technical measures, waning momentum, and extreme bearish sentiment) suggest that the market is ripe for an upward reversal. The market should be in the latter stages of the decline.

"...the divergence between price (declining) and momentum (waning) point to... an eventual upward turn in what should be a healthy advance despite the oppressive (and well publicized) fundamental backdrop."

For UNG, Energy Specialty Service's editor Steven Craig wrote this on April 20:

"No bottom yet but I continue to suspect that it's close at hand. The market is oversold and ripe for a reversal."

Since then, both natural gas futures and UNG have rallied 27%.

This is the big league of energy markets. Natural gas futures -- and UNG has an average daily trading volume of 8.5-10 MILLION. And, that's just the tip of what EWI's Energy Specialty Service covers.

This premier energy trader-focused resource brings you intraday and daily updates for:

NYMEX crude oil
Brent crude oil
Heating oil
Unleaded gas
Natural gas

PLUS: You get daily forecasts for energy ETFs UNG, XLE and USO.

Don't miss another beat. Get the complete, inside story today with your very own, personalized Energy Specialty Service package.

(Editor's Note: Natural Gas prices have gone on to rally as much as 35% since the April low. Posted May 17)

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