The Crucible Report – Separating Truth From Fiction In The Natural Gas Market

Natural gas is everyone’s favorite commodity to hate. As recently as mid-October, natural gas prices had fallen 30% in 2019, and the stock prices of many natural gas producers are down between 50-80% for the year. No wonder they call natural gas “the widow maker.”

Speculative positioning in the commodity and the stocks reflect a high level of conviction that the downdraft is likely to persist.

The narrative supporting this bleak outlook revolves around two key tenets. First, that zero-cost associated gas volumes will continue to grow and outstrip demand, placing significant downward pressure on the commodity for the foreseeable future. Second, that the recent supply surge from the Utica and Haynesville shales are proof that North America possesses a massive inventory of very lowcost, capital-efficient wells which will keep the market oversupplied at depressed prices even after associated gas volumes begin to moderate.