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Author: James Finch Article source: http://www.articlealley.com/. Used with author's permission.
Experts have begun calling this the 'Cape Verde Hurricane Season,' because multiple storm systems are moving westward from Africa through the Cape Verde Islands. Hurricane scientists from Europe and the United States are now in Africa studying the clusters of storms rolling off Africa's coast. Another team is in the Caribbean.
Some of the thunderstorm clusters, called 'tropical waves,' which form between seven and ten times per month, develop into hurricanes. Of the 60 or 70 tropical waves passing over West Africa's Cape Verde Islands, about ten percent grow into tropical storms or hurricanes. According to the National Oceanic and Atmospheric Administration (NOAA) in Miami, these African thunderstorms account for 85 percent of all major Atlantic hurricanes.
Offshore oil and gas production in the Gulf of Mexico, which accounts for about 25 percent of U.S. production, may be shut down again this summer. There could be several hurricanes expected in the Gulf of Mexico's hurricane season, which lasts through November 1st. Most of the devastating Atlantic hurricanes occur between mid August and early October because of the warmer water temperatures.
"Things are not back to normal in the Gulf of Mexico," said Flynn. "Gas storage is needed as a buffer against extreme weather." In this case, a hurricane or a series of hurricanes would be extreme weather. Flynn believes that despite ample storage the market is "easily given into the passions of weather extremes."
In our mid July interview with Sprott's Eric Nuttall, he leaned toward the camp which was bullish, saying, "Now is the time to load up on the (nat gas and CBM) stocks." He recommended some of his firm's favorites, which as he admitted at the time could trade sideways for the next two months. These included, among others, Crew Energy (TSX: CR), Canadian Spirit Resources (TSX: SPI) and Pacific Asia China Energy (TSX: PCE).
Nuttall believed there were significant opportunities in unconventional gas companies, known as coalbed methane (CBM) companies, as well as conventional gas shares. As Nuttall previously told us, "Most incremental production is coming from smaller, more expensive-to-drill, thinner economic, higher decline pools and reservoirs."
But, Nuttall cautioned, "Timing on any natural gas investment right now is tricky." And he added, "Although the market might be a bit sloppy for a few months, I think there are some great bargains to be had for the patient investor."
We pursued our July interviews on the subject of natural gas based upon a luncheon meeting we had in early June with Steven Mizener, chief equities strategist for the Toronto mutual fund company, Sentry Select. He advised patience in the natural gas markets and that by the end of August, natural gas stocks might again gain favor.
Phil Flynn warned of stronger drawdowns this winter, "With a colder winter and heating usage for gas, there will be a lot more drawing (of the inventories). We could have a significant depletion in storage if we have a cold winter."
Again, investors have been lulled by the 'false sense of security' of the perceived storage surplus. And as one wit remarked on the Motley Fool chat board, "With that inventory drawdown last week due to the heat, it appears that we may have seen the bottom in natural gas for some time to come."
James Finch contributes to StockInterview.com and other publications. Visit http://www.stockinterview.com to download your free copy of "Investing in the Great Uranium Bull Market: A Practical Investor's Guide to Uranium Stocks." You can always write to James Finch at jfinch@stockinterview.com
James Finch is a contributing editor for StockInterview.com and other publications.
http://www.stockinterview.com
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