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Prices for natural gas are headed up while oil prices are headed in the opposite direction, according to recent news reports.
A report by ETF Daily News says natural gas prices have already risen 30 percent in 2013, and there are five factors that continue to push prices higher. The most significant price drivers are the expanding use of natural gas for electricity generation and the exporting of American natural gas, which will begin in 2014.
Global Energy Strategist Dr. Kent Moors, of the Monday Morning analysis team, said there is a massive transition occurring in electric power generation, with natural gas replacing coal as the preferred fuel.
Even more significant to natural gas prices, Moors said, is the imminent increase in exports of U.S. natural gas. Within a few years, the United States is expected to supply between 9 and 12 percent of the global flow of liquefied natural gas, up from less than 1 percent now.
The other three factors driving up natural gas prices are increasing industrial use; increasing use as a feeder stock in the petrochemical industry, with a corresponding decrease in oil usage; and increasing use in transportation.
Meanwhile, oil prices are dropping and analysts see more decreases in the future, according to a recent CNBC report. Increasing U.S. oil output is combining with falling demand for gasoline to drive the cost of West Texas Intermediate Crude oil to $86 a barrel, the report states. "If we break $86, I'm looking for $82," analyst John Kilduff of Again Capital told CNBC.
To read the ETF Daily News article, click here.
To read the CNBC article, click here.