Why Natural Gas Prices are Headed Much Lower

     Coming into this winter you wouldn't have found a bigger bull, than myself, when it concerned natural gas prices. The frigid memories of last winter were still in my head, and we were entering this one with a large deficit in natural gas inventories. A funny thing happened--winter for a large part of the country west of the Mississippi, was never more than a few small instances of snow and ice. The same of course could not be said for the east coast with record snowfall and bitter cold for much of February. And that's the point; it was only February, the beginning of the winter for the northeast was almost pleasant. When you coupled the lack of sustained cold with the amazing production gains in natural gas it was a recipe for lower prices--and ones that could go much lower from here in my opinion. We just finished one of the coldest weeks on record and the draw in natural gas fell well short of expectations when the number was released earlier today. This is happening because of the production gains in fracking --just as in crude oil, the fracking revolution has permeated the natural gas markets. We are now almost 50% above supply figures than we were last year at this time. When you look at the calendar you realize there are about 4 weeks of winter left. This is one of the best scenarios someone looking to short Nat gas could ask for ; projected lower demand and higher production. For these reasons this bull has now become a bear--I am looking to sell the market-- the 50 day Moving average comes in around 293 and offers good resistance.  My belief is you could short Natural gas within 10 handles of this level. If temps moderate quickly this spring and production of Nat gas continues at its current pace--we could see a 230 to 220 handle in prices by April. We are entering what I call the in-between season where Nat gas is not used for heating or cooling--demand falls considerably.

Anthony Grisanti --President GRZ Energy