'After enduring one of the worst slumps on record, we’re beginning to see a rebound in all major commodities market," says Lee Lowell, adding "But one commodity stands out in particular -- natural gas."
In Xcelerated Profits Report, he explains, "This could represent the best buying opportunity in several years." Here's the advisor's recent review of the United States Natural Gas (NYSE: UNG), an exchange-traded fund.
'As it so often does, it’s no surprise to see the energy market leading commodities higher over the past few weeks – specifically, crude oil and natural gas.
'This was the case when I was an option market maker in the oil and gas trading pits on the New York Mercantile Exchange (NYMEX) for many years. I’m very familiar with how these markets work and what moves them – and now is the time to buy natural gas.
"What we have here is a once-in-a-blue-moon buying opportunity. Having topped out at $14 per MMB/tu (British thermal units) last summer, natural gas then crumbled to $3.25 per MMB/tu on April 30, as the credit crisis and recession took hold and demand tanked.
'Natural gas is still trading near historic lows after its 2008 meltdown. But in recent weeks, the market seems to have bottomed out and has established a good support area that makes for a great buying opportunity.
"With the bears prowling for so long – and all bets seeming to pay off – finding a bull in the natural gas market has been like trying to find a needle in the proverbial haystack.
"The market essentially got hit with a double-whammy. The financial crisis and recession blasted demand. And as underground storage supplies began to build up, speculators fled the market.
"Given that this situation hasn’t changed too much, you may wonder why we’re bullish when everyone else is bearish.
"Simply, put, history has shown that some of the best times to buy are when everyone else is selling. And even though the price wouldn’t ordinarily head higher until the supply-demand equation resolves itself to a more balanced point, there’s a difference in this case.
"The market has known about the excess supply for ages – and it’s reacted by sending prices down to bargain-basement levels.
"But it’s fallen so far that it can’t logically fall much further without it making more sense for natural gas drillers to actually shut down production, as it costs more to extract the gas than they can sell it.
'And with the price recently poking back up above the $4 level, it’s proof that the market has priced this in. Simply put, we’ve come to a point technically where it’s a good time to go long.
'As for the buildup of natural gas supplies, they will get drawn down as we head into the summer – a season that features air conditioners cranked up and hurricane season in the Southeast and Gulf of Mexico.
'Many natural gas companies have also reduced the number of drilling rigs, which will reduce supplies and underpin the price. So we’re going to initiate a bullish position in natural gas by using the United States Natural Gas Fund – the ETF that represents the natural gas market.
'The UNG fund is a pure play on natural gas that gives you direct exposure to the market. It tracks the price performance of natural gas by investing in the commodity’s 'front-month' futures contract (i.e. the closest one to expiration) that trades on the NYMEX.
'There are no other influences on its moves, other than those futures. As an ETF, UNG trades just like a stock on the NYSE and is available to buy and sell at any time.
'In addition, gaining broad exposure to the natural gas market through just one investment boosts your diversity while also adding a layer of risk protection. And by investing in an ETF, rather than a mutual fund, your costs are lower.'
