In this issue:

As usual, crude has been hogging the headlines. Meanwhile, the decline in natural gas prices has been almost as dire, leaving only a select few producers in position to continue to profit even as rivals run out of cash and credit.

This month we review the recent gas market trends and explain why we still like the few gas producers left in the portfolios. We also screen their fundamentals against those of their closest competitors to help you make your own decisions.

The only constant in commodities is that the best producers should be bought when prices have hit rock bottom. And while we can only know in retrospect where that bottom lies, geology and math suggest it’s not far off for both crude and natural gas.

That doesn’t mean that now is the time to throw  all the cash you’ve built up during the slump into these volatile sectors. But it’s definitely time to get those shopping lists ready, and we’re working to compile ours.

Stay tuned.   

Commodity Update

Crude prices have settled back into the mid-$40s. Since our previous issue, West Texas Intermediate (WTI) rose $0.77 to $45.40/bbl, while Brent crude gained $0.19/bbl to settle at $48.33 (all prices as of Sept. 25). Looking out a year from now to the October 2016 contract, WTI can be had for $50.83/bbl — a price that I suspect will look cheap a year from now. Likewise, you can buy a December 2023 contract for only $61.04/bbl. If that price held true it would mean that crude would only appreciate by 3.6% annually between now and then. Natural gas prices dropped $0.09 per million British thermal units (MMBtu) since our previous issue to close at $2.60. Currently, the nearest natural gas futures contract to trade above $3/MMBtu expires in December 2016.

In Other News

• Goldman Sachs suggested that oil could fall to $20/bbl in the near term, projecting that we may be in for 15 years of weak prices

• The Obama Administration said it opposes an end to the 40-year-old ban on exporting crude oil (as I have predicted)

• The North Dakota Industrial Commission approved a proposal to delay further mandatory cuts to the gas flaring associated with oil output until late next year

• Hillary Clinton has come out against the Keystone XL pipeline

• Total (NYSE: TOT) has announced plans to slash capital spending by $3 billion in response to low oil prices

• Venezuela is floating a proposal within OPEC that would focus on sustaining a price floor on crude of at least $70/bbl.