Natural gas futures currently site around $3.93 million British thermal units. [Natural Gas ETF Gains Momentum after Breaking 200-Day Average]
Supporting natural gas prices, Gilbertie points to a steadily declining dedicated rate of natural gas production as producers shut down rigs in light of historic low natural gas prices. He does not expect rigs to turn on until we see a $4 support floor.
“Guys are not going to turn the assets back on”, Gilbertie said. “You can harm the assets if you turn it on and off.”
Moreover, Gilbertie remarks on the the rising inelastic demand – changing prices have little effect on overall demand, as more power plants and houses are switching from oil to natural gas as a primary energy source due to the current low prices. [Natural Gas ETFs Rally on Inventories, Weather]
Nevertheless, investors should be aware that the market suprlus is still above its 5-year average and there is still significant production capacity, Gilbertie warned.
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Max Chen contributed to this article.