Why I'm Negative on US Natural Gas

The oil price has rallied sharply in 2018, will natural gas be next?

We see two big reasons, and two little ones to be bearish on natural gas.

Firstly, measures to support the coal and nuclear sectors in the US must impact natural gas demand. Secondly, the rising price of oil is driving exploitation of tight oil resources in the Permian, and other unconventional US basins. This oil comes with associated gas, increasing supply. Renewables also continue to take market share, and as the price of solar installations will likely fall further, this is a long term drag on the whole fossil fuel industry. Finally, there is little new US LNG export capacity coming on stream in 2018: this means that the domestic price has to bear the full brunt of falling demand and increased supply.