Why Some Think Natural Gas ETF Could Be Seeing a Spike
May 6th at 11:00am by Tom Lydon
Natural gas prices are low, but one CEO is predicting a big rebound that could benefit related exchange traded funds (ETFs). Chesapeake Energy Corp.’s CEO Aubrey K. McClendon said that the current price levels aren’t strong enough to support a North American rig count, which is setting the stage for a “dramatic” reversal, reports Randy Ellis for News OK.
How high prices will go, no one is claiming to know. But McClendon points out that a year ago, prices were too high at $12 to $13 per thousand cubic feet; now they’re far too low, at $3.50 per thousand cubic feet.
His prediction is that the rebound will overshoot on the high side. He considers $8 to $9 to be the mid-range of normal pricing.
Not everyone agrees, though: one gas marketing company president says he doesn’t foresee the same kind of dramatic rise and that much of what happens depends on the economy.
While predictions are interesting, wait for the actual trend to emerge first. No one can actually know the true future. United States Natural Gas (UNG) is currently sitting below both its short- and long-term trend lines.
