With commodity futures trading having just kicked off a little over an hour ago, one of the more notable movements is in front month Natural Gas futures which launched out of the gate with a 2.2% drop. Natty Gas is now almost back to the January 22nd low of 2.28 (it currently sits at 2.43).
That bounce off of the Jan 22nd low occurred because Chesapeake (ticker: CHK) announced they were shutting down wells and cutting production (
you can read our January 23rd post about the announcement here). In that Jan 23rd post we wondered if CHK's main competitors Range Resources Corporation (ticker: RRC) and EQT Corporation (ticker: EQT) would follow suit with their own production cuts. We surmised that they wouldn't unless the price dropped through the January 22nd level and so far no additional cuts have been announced by anyone. All 3 stocks saw a nice pop after the production cut:
As the spread between crude oil and nat gas continues to widen, one would imagine that there is an increased focus around the world on using nat gas as a substitute. We expect that energy ministers around the world have been keeping a close eye on a chart similar to this one:
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