Written by Attain Alternative Blog

It’s no secret that energy markets have gotten slaughtered this year. We half-jokingly wrote “How to Play a Bounce in Oil (Hint: Not $USO)” earlier this year, only to see Crude continue lower and lower with nary a bounce in sight, and talked about the pain in the MLP sector .

But there hasn’t been a lot of talk about the neutering of the market formerly known as the widowmaker. The market that has seemed to miss most people’s radars is Natural Gas. Sure Crude Oil dropped an additional -38% in 2015, but just a couple days ago, Natural gas reached the 
second lowest close on record, via the Wall Street Journal:

Futures for January delivery settled down 7.2 cents, or 3.8%, on Tuesday at $1.822 a million British thermal units, the lowest settlement since March 24, 1999.

On an inflation-adjusted basis, Tuesday’s settlement price is the second-lowest on record. The inflation-adjusted record low is $1.80/MMBTU, reached in January 1992.

Since then, Natural Gas has rebounded a little bit, up to 1.91, but that seems rather insignificant when looking at the long term fall in Natural Gas from its lofty levels in 2007/8 ? We’re talking of losses of -41% this year, and nearly -90% since 2007. That’s a brutal sell off, and responsible for more than its share of MLP problems even though Crude Oil prices get most of the spotlight.

(Disclaimer: Past performance is not necessarily indicative of future results)
Data Courtesy: Barchart

Return Factors:

Many are blaming the El Nino for the massive drop in prices, but that’s a demand issue layered on top of a massive supply issue. Remember – fracking isn’t just for Oil. Natural Gas is a natural byproduct of all that goes on in the oil patch – and the record supply in WTI has meant similar record supply in Natural Gas. It’s the combination of a record amount of supply, the Natural Gas companies becoming more efficient of extracting Natural Gas, and the warmer temperatures. Although – doesn’t it seem like your energy bill at home would be 85% less than a few years ago with gas prices so low.