Natural Gas Seasonality: Time To Buy

This is a seasonal chart of the Natural Gas Futures price. Despite the bearish comments on the Street about the excess supply of Natural Gas and the bearish price outlook (several analysts are predicting a 4.00 dollars in the next few weeks) this is actually on the strongests periods for Natural Gas. The period between early march and late April is a very bullish period for natural gas.

This move can be played through Natural Gas futures, via the natural gas ETF, United States Natural Gas Fund, LP (Public, NYSE:UNG) or buying some natural gas sensitive stocks like Chesapeake Energy Corporation (Public, NYSE:CHK), Devon Energy Corporation (Public, NYSE:DVN), SandRidge Energy Inc. (Public, NYSE:SD) or Delta Petroleum Corp. (Public, NASDAQ:DPTR).

Natural gas has everything fundamentally going for it right now. It is cheap, it is domestic and it is plentiful. So while crude hovers above $80 a barrel, natural gas still trades at under $4.50 per mmbtu. That's an incredible 18-to-1 ratio, well over the more historically traditional six-to-10 times differential. So we know that natty is cheap. With recently discovered Marcellus and Texas shale deposits and new injection technologies to get at them, the U.S. has become the "Saudi Arabia of natural gas," with well over 100 years of new supply now waiting to be tapped. So we know it is plentiful and domestic.

So, even if Washington has been slow to recognize natural gas as the cornerstone of a new national energy plan, corporate America has been far less slow to recognize the obvious. Exxon Mobil(XOM) was first, paying $41 billion, an incredible premium, for XTO Energy(XTO). Then Total, the French energy giant, ponied up $2.25 billion for a quarter stake of Chesapeake's(CHK) Texas shale fields. Last week, BP(BP) paid a smaller amount to acquire a one-half stake of Lewis Energy's Texas shale holdings. And that has been followed by this most recent Arrow Energy deal offer from Shell and PetroChina.