I have spoken on BNN's Market Sense a couple of times over the past week on my thoughts on Natural Gas. They are as follows:
1. I can't find even one strategist in North America who is at all bullish on Natural Gas (creating a contrarian trade right there),
2. Everyone knows the weather story,
3. Natural Gas is trading pretty well spot on the "cash costs" for the average of all producers at $2.35. Over the last 10-15yrs, it has never traded below that level for long,
4. Production will be cut (like Chesapeake did last week) when they are not able to hedge and Natural Gas is trading at their cash costs,
5. When other producers, who's stock has been falling precipitously, see CHK stock go up 15% on their announcement of production and capex cuts, it won't take long for others to follow suit,
6. Coal to Gas switches start to occur at the Utilities. We have already seen some of that with Appalachian Coal but we are about to see it with Poweder River Basin Coal.
I really think this is a production story and will likely fall in line.