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Crude Falling Can Be A Positive For Natural Gas

Seeking Alpha -- In the short term, as crude falls, it's normal that natural gas will also feel downward pressure. However, over the medium term crude falling can also be a positive for natural gas prices.

Why is this so? This happens because as natural gas crashed due to oversupply, natural gas producers such as Encana (ECA) and Chesapeake (CHK) shifted their focus towards "wet plays", that is, zones where wells would produce more liquids like crude or LNG and less natural gas. So in the statistics while we saw a steep drop in rigs drilling for natural gas, we observed a large increase in rigs drilling for oil/liquids. The problem here, is that even the liquid plays also yield a lot of natural gas, so the drop in natural gas production is hindered by a lot of exploration for liquids.

However, as crude i

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Submitted Jun 02, 2012 By: mastermariner

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remay Champion Author Houston Posts:6,963 Points:2,116,640 Joined:May 2006	Message Posted: Jun 3, 2012 12:11:23 PM Ignore remay Report Abuse Just wish there would be a HAPPY MEDIUM for both!
Agarre Champion Author Richmond Posts:1,335 Points:263,785 Joined:Feb 2012	Message Posted: Jun 2, 2012 10:12:19 PM Ignore Agarre Report Abuse ECA & CHK ?
A2J Champion Author Richmond Posts:3,070 Points:601,975 Joined:Aug 2011	Message Posted: Jun 2, 2012 7:29:34 PM Ignore A2J Report Abuse Really ?
sljbc475 Champion Author Tucson Posts:4,215 Points:871,400 Joined:Dec 2010	Message Posted: Jun 2, 2012 12:16:56 PM Ignore sljbc475 Report Abuse Let the long-haul truckers convert to natural gas.
DanMtz Champion Author Oakland Posts:3,350 Points:1,242,350 Joined:Oct 2009	Message Posted: Jun 2, 2012 12:14:41 PM Ignore DanMtz Report Abuse Hopefully, years down the road we will learn to take advantage of the over-abundance of natural gas.
58salty Champion Author Jacksonville Posts:6,605 Points:628,915 Joined:Aug 2011	Message Posted: Jun 2, 2012 12:01:05 PM Ignore 58salty Report Abuse ok
checkum Champion Author St. Louis Posts:7,591 Points:1,474,040 Joined:Jan 2008	Message Posted: Jun 2, 2012 8:58:20 AM Ignore checkum Report Abuse build up the infrastructure
DrZNY Champion Author Albany Posts:2,559 Points:823,285 Joined:Jan 2009	Message Posted: Jun 2, 2012 8:38:43 AM Ignore DrZNY Report Abuse Yes, TAT36, my natural gas bill is the same as yours.
TAT36 Champion Author Florida Posts:6,799 Points:1,303,025 Joined:Sep 2009	Message Posted: Jun 2, 2012 8:34:26 AM Ignore TAT36 Report Abuse Seems like my natural gas bill is made up of more transmission fees, taxes and misc. items than the actual amount they charge for the product itself.
slowtrain Champion Author Georgia Posts:3,662 Points:947,925 Joined:Aug 2008	Message Posted: Jun 2, 2012 8:21:12 AM Ignore slowtrain Report Abuse It's got a long way to go.
1stClicker Champion Author Texas Posts:5,316 Points:2,243,545 Joined:Oct 2005	Message Posted: Jun 2, 2012 8:11:51 AM Ignore 1stClicker Report Abuse Going down, but not enough.
turbosaab Champion Author Cleveland Posts:19,009 Points:2,339,220 Joined:Sep 2006	Message Posted: Jun 2, 2012 8:11:44 AM Ignore turbosaab Report Abuse Somebody makes a lot of money no matter what happens.
123cowboy Champion Author Maine Posts:1,833 Points:403,570 Joined:Mar 2011	Message Posted: Jun 2, 2012 8:10:23 AM Ignore 123cowboy Report Abuse either "gas" is still going to be about $$$$..
vamike Champion Author Virginia Posts:5,325 Points:1,364,950 Joined:Dec 2008	Message Posted: Jun 2, 2012 8:09:00 AM Ignore vamike Report Abuse Falling, but still not where it should be.
MarAzul Champion Author London Posts:3,776 Points:678,735 Joined:Feb 2011	Message Posted: Jun 2, 2012 8:08:17 AM Ignore MarAzul Report Abuse Good news.
ssnvet All-Star Author California Posts:598 Points:66,960 Joined:Mar 2012	Message Posted: Jun 2, 2012 8:08:03 AM Ignore ssnvet Report Abuse It appears crude is falling due to poor economic conditions - brought on by the planned destruction of the U.S economy in the U.S Capitol. What to do? The election is coming in November - choose wisely people, or you will soon see you liberty and freedom lost.
Blondie22OH Champion Author Cincinnati Posts:1,541 Points:338,190 Joined:Feb 2012	Message Posted: Jun 2, 2012 8:07:51 AM Ignore Blondie22OH Report Abuse ok
Caribou2011 Champion Author Ohio Posts:3,761 Points:767,860 Joined:Feb 2011	Message Posted: Jun 2, 2012 8:07:48 AM Ignore Caribou2011 Report Abuse only falling because the economy is too!!
icer06 Champion Author Huntsville Posts:2,423 Points:456,320 Joined:Jan 2012	Message Posted: Jun 2, 2012 8:07:00 AM Ignore icer06 Report Abuse ok
Tru2psu2 Champion Author Winston-Salem Posts:14,471 Points:1,555,105 Joined:Feb 2004	Message Posted: Jun 2, 2012 8:06:55 AM Ignore Tru2psu2 Report Abuse good...
Bus936 Champion Author Lexington Posts:16,444 Points:3,220,005 Joined:May 2004	Message Posted: Jun 2, 2012 8:06:20 AM Ignore Bus936 Report Abuse Right now I would venture to say that electric will beat out natural gas as these vehicles are currently being built. Natural gas is in the future if ever. Electric is already up and all they need now is quick chargers.
keithyoon1977 Champion Author Virginia Posts:1,909 Points:495,490 Joined:Dec 2011	Message Posted: Jun 2, 2012 8:05:29 AM Ignore keithyoon1977 Report Abuse Ok
Zuman Champion Author New York Posts:6,159 Points:1,897,705 Joined:May 2005	Message Posted: Jun 2, 2012 8:05:10 AM Ignore Zuman Report Abuse Natural gas is at lows now who are they kidding.
Pramodsharma Champion Author Richmond Posts:1,974 Points:386,640 Joined:Feb 2012	Message Posted: Jun 2, 2012 8:04:59 AM Ignore Pramodsharma Report Abuse It's crude dude!
mlmeng Champion Author Michigan Posts:1,630 Points:590,085 Joined:Mar 2011	Message Posted: Jun 2, 2012 8:03:54 AM Ignore mlmeng Report Abuse Too much supply for too little demand. I wouldn't mind having a natural gas burning vehicles (at the right price and with the right infrastructure).
bozo Champion Author Boston Posts:4,690 Points:2,091,630 Joined:Feb 2003	Message Posted: Jun 2, 2012 8:03:41 AM Ignore bozo Report Abuse lots of people converting from heating with oil to natural gas in the northeast.
rhail2 Champion Author Kentucky Posts:1,452 Points:287,485 Joined:Apr 2011	Message Posted: Jun 2, 2012 8:02:21 AM Ignore rhail2 Report Abuse ok
lpatti1 Champion Author Philadelphia Posts:10,196 Points:1,962,285 Joined:Sep 2005	Message Posted: Jun 2, 2012 8:02:03 AM Ignore lpatti1 Report Abuse OK? I guess!
mk9999 Champion Author Rochester Posts:7,910 Points:1,672,870 Joined:Aug 2008	Message Posted: Jun 2, 2012 8:01:39 AM Ignore mk9999 Report Abuse If you want a good economic recovery both oil and natural gas need to be affordable to all.
eightiesgod Champion Author Ohio Posts:3,375 Points:1,231,885 Joined:Oct 2008	Message Posted: Jun 2, 2012 8:01:01 AM Ignore eightiesgod Report Abuse k..
RockCity Champion Author Denver Posts:7,910 Points:1,427,110 Joined:Mar 2009	Message Posted: Jun 2, 2012 8:00:44 AM Ignore RockCity Report Abuse This must make sense to you, not me, perhaps.
gavinON All-Star Author Toronto Posts:562 Points:112,935 Joined:Mar 2012	Message Posted: Jun 2, 2012 7:59:59 AM Ignore gavinON Report Abuse hmmmm
kjSC Champion Author South Carolina Posts:3,377 Points:681,375 Joined:Apr 2011	Message Posted: Jun 2, 2012 7:59:41 AM Ignore kjSC Report Abuse Interesting.
Gas_Eyes Champion Author Dallas Posts:2,672 Points:643,885 Joined:Mar 2011	Message Posted: Jun 2, 2012 7:58:33 AM Ignore Gas_Eyes Report Abuse What would really make natural gas price rise from the record low is more demand from transportation in the form of more CNG cars, trucks and filling stations.
29louieson Veteran Author Phoenix Posts:310 Points:151,500 Joined:Mar 2012	Message Posted: Jun 2, 2012 7:58:01 AM Ignore 29louieson Report Abuse Up one day down the next . Don't they have fancy computer models to figure this out ?
thuathienhue Champion Author Michigan Posts:3,448 Points:633,340 Joined:Jul 2011	Message Posted: Jun 2, 2012 7:57:35 AM Ignore thuathienhue Report Abuse OK
Topless2012 Champion Author Twin Cities Posts:2,432 Points:481,065 Joined:Jan 2012	Message Posted: Jun 2, 2012 7:56:46 AM Ignore Topless2012 Report Abuse ok
Maintroll Champion Author Lexington Posts:8,629 Points:1,702,910 Joined:Aug 2008	Message Posted: Jun 2, 2012 7:56:18 AM Ignore Maintroll Report Abuse There won't be any positive for natural gas until a proper infrastructure is in place, and vehicles are converted in order to properly burn it.
BigZ1959 Champion Author Denver Posts:3,753 Points:1,462,250 Joined:Oct 2008	Message Posted: Jun 2, 2012 7:55:53 AM Ignore BigZ1959 Report Abuse up
Marson Champion Author Scranton Posts:8,942 Points:2,077,185 Joined:Oct 2006	Message Posted: Jun 2, 2012 7:55:29 AM Ignore Marson Report Abuse Interesting observation.
vizilo Champion Author British Columbia Posts:5,729 Points:2,590,650 Joined:May 2004	Message Posted: Jun 2, 2012 7:55:21 AM Ignore vizilo Report Abuse we'll see
2khawk Champion Author Iowa Posts:5,254 Points:927,050 Joined:Oct 2010	Message Posted: Jun 2, 2012 7:54:02 AM Ignore 2khawk Report Abuse Oil has been overpriced for too long.
numbers Champion Author North Dakota Posts:2,801 Points:850,040 Joined:Aug 2004	Message Posted: Jun 2, 2012 7:52:47 AM Ignore numbers Report Abuse I guess
herndonks Champion Author Baltimore Posts:1,116 Points:211,685 Joined:Dec 2011	Message Posted: Jun 2, 2012 7:52:22 AM Ignore herndonks Report Abuse interesting
paul12011 Champion Author Chicago Posts:1,758 Points:91,055 Joined:May 2011	Message Posted: Jun 2, 2012 7:51:29 AM Ignore paul12011 Report Abuse ridiculous
nwhawk Champion Author Kansas Posts:1,962 Points:571,690 Joined:Nov 2010	Message Posted: Jun 2, 2012 7:51:29 AM Ignore nwhawk Report Abuse so????
METEOR49 Champion Author Ontario Posts:2,167 Points:454,250 Joined:Apr 2011	Message Posted: Jun 2, 2012 7:51:28 AM Ignore METEOR49 Report Abuse just more manipulation of the consumer .there will be no recovery until our governments ensure a stable and cheap energy supply.
tribill Champion Author Twin Cities Posts:3,342 Points:2,338,960 Joined:Feb 2006	Message Posted: Jun 2, 2012 7:51:09 AM Ignore tribill Report Abuse Whatever....
shores4now Champion Author Kentucky Posts:2,406 Points:523,800 Joined:Jul 2009	Message Posted: Jun 2, 2012 7:50:36 AM Ignore shores4now Report Abuse ok
SUPERSTEVIEO Champion Author Quebec Posts:3,523 Points:787,115 Joined:Oct 2010	Message Posted: Jun 2, 2012 7:49:56 AM Ignore SUPERSTEVIEO Report Abuse what i sthe difference between LNG and natural gas?????????????????? seems to me they are one and the same???