Liquid Natural Gas #LNG #NatGas Long / Short Term View
LNG has a long history of not getting any love.
Famously, in 1971...a Russian oil rig fell into a crater filled with LNG. They figured the best move was not to capture the LNG...but to use it to burn the oil rig. 50 years later...that crater is still burning...and is known as the Door to Hell.
LNG has often been thought of a cheap, plentiful energy source...and a second cousin to oil....a distant second cousin.
As you can see in the chart... it has experienced some dramatic price spikes since 2000....usually amid extreme heat or cold spells. Due to the short duration of the temperature anomalies, the price drops just as quickly as it spiked.
However, this time is different. We are at the beginning of a global energy transition. Earlier this year, governments from around the world have backed the "net zero by 2050" goal. This essentially means the world is pushing for a drastic reduction in the use of fossil fuels.
We are rapidly increasing renewable energy production...however...this 2050 goal is very ambitious for a world energy infrastructure built for oil.
The most pragmatic experts agree that fossil fuels will still be in use by then...though greatly reduced.
And of the carbon producing fuels...liquid natural gas must play a greater role in the world's energy infrastructure.
So the long term fundamental view look almost inevitably bullish.
Recently we have seen a supply disruption as a pipeline segment in Arizona exploded...tragically killing 2 people. (Story sourced from Leticia Gonzalez twitter).
In addition, Hurricane Ida disrupted supply production while temperatures have remained elevated, causing a greater demand.
As always...markets don't move is straight lines. However, I see demand for LNG continuing to increase globally for a long time.
*While writing this...Nat Gas jumped 0.20...breaking short term resistance...currently sitting at $4.855
Famously, in 1971...a Russian oil rig fell into a crater filled with LNG. They figured the best move was not to capture the LNG...but to use it to burn the oil rig. 50 years later...that crater is still burning...and is known as the Door to Hell.
LNG has often been thought of a cheap, plentiful energy source...and a second cousin to oil....a distant second cousin.
As you can see in the chart... it has experienced some dramatic price spikes since 2000....usually amid extreme heat or cold spells. Due to the short duration of the temperature anomalies, the price drops just as quickly as it spiked.
However, this time is different. We are at the beginning of a global energy transition. Earlier this year, governments from around the world have backed the "net zero by 2050" goal. This essentially means the world is pushing for a drastic reduction in the use of fossil fuels.
We are rapidly increasing renewable energy production...however...this 2050 goal is very ambitious for a world energy infrastructure built for oil.
The most pragmatic experts agree that fossil fuels will still be in use by then...though greatly reduced.
And of the carbon producing fuels...liquid natural gas must play a greater role in the world's energy infrastructure.
So the long term fundamental view look almost inevitably bullish.
Recently we have seen a supply disruption as a pipeline segment in Arizona exploded...tragically killing 2 people. (Story sourced from Leticia Gonzalez twitter).
In addition, Hurricane Ida disrupted supply production while temperatures have remained elevated, causing a greater demand.
As always...markets don't move is straight lines. However, I see demand for LNG continuing to increase globally for a long time.
*While writing this...Nat Gas jumped 0.20...breaking short term resistance...currently sitting at $4.855
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