For families using natural gas in their homes, this
In 2015, there were only 6 million homes that use
Consolidated Edison, Inc. is a public company that invests significantly in natural gas transmission projects. They believe natural gas prices could rise to as much as
Spectra Energy Corp. is currently working on expanding the Algonquin Pipeline, allowing it to carry 342 million cubic feet of natural gas per day to Boston and surrounding cities. The $876 million project is being met with considerable roadblocks from protestors and a potential conflict of interest among those at the Federal Energy Regulatory Commission (FERC) who
(Click to enlarge)
Source: Spectra Energy Corp.
When the project is completed later this month, Spectra shares will likely rise. Engie SA regularly makes LNG tanker deliveries into Boston, helping reduce the strain on the pipelines. Spectra is indirectly competing with Engie and if they’re able to reduce Engie’s obligation in New England then the France based company’s shares could drop.
With all of this expected volatility, call options are a strong investment choice in the market for natural gas. Investors should look at the weather forecast to better predict when these spikes will occur and react accordingly. Spreads between the spot rate for Algonquin pipeline and Henry Hub could also earn high yields. Other natural gas suppliers will profit if prices rise as high as Consolidated Edison predicts.
By Michael McDonald of Oilprice.com
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