NEW YORK (TheStreet) -- I was talking today with Jim Cramer about the dropping prices of natural gas in the face of sub-arctic temperatures here in the Northeast.
Wait, what? Intuitively, with temps in single digits and with electricity prices going through the roof, you'd expect the price of natural gas to similarly be ratcheting higher, not selling off. But traders are a forward-thinking bunch and with temperatures here in the Northeast forecast to be well above average starting this weekend and extending for another week, many have decided to sell out long positions or even go short in the futures market.
While I think that natural gas is destined to increase to $5/mcf in 2014, I don't believe that move will be a direct one from here. I am hoping for a decrease in natural gas prices in the next few weeks to begin to position myself for what I think will be an even stronger run in prices in the third quarter.
Some stocks that might still contain some value for another price run are in LNG processing and transport, specifically with tanker stock Golar (GLNG) and its off-shoot MLP Golar Partners (GMLP). You could also go straight to the source and look directly at gas producers as well. Despite the strong run of many of the smaller cap natural gas stocks specifically engaged in the very strong Marcellus play, there is still value in some.
I'm particularly looking at Southwestern Energy (SWN), a company I believe has stellar assets and management, and Cabot Oil and Gas (COG), which has already had a tremendous run but I believe has more to go.
I talk more about the price action of natural gas with Jim in the video above.