The top five holdings of this natural gas fund are: EOG Resources Inc (EOG, 7.90%); Anadarko Petroleum Corp (APC, 6.60%); Schlumberger Ltd (SLB, 6.49%); Occidental Petroleum Corp (OXY, 5.40%); and Devon Energy Corp (DVN, 5.06%).
Fidelity Select Natural Gas Fund (FSNGX)
From Sound Advice
Fidelity Select Natural Gas Fund (FSNGX) is a diversified way to participate in the growth of the natural gas industry through strong companies. Natural gas provides the same energy as oil for pennies on the dollar, and natural gas is more environmentally friendly. One barrel of oil provides approximately 5.8 million British Thermal Units (BTUs) of energy. However, with the current market price for natural gas at $2.80 for one million BTUs, 5.8 million BTUs will cost $16.24. Thus, with a barrel of oil costing $70, the same amount of energy is available for approximately 23 cents on the dollar if it is in the form of natural gas rather than oil.
The updated chart shows the historic relationship between the costs of these two forms of energy. The red line shows the price of a barrel of oil since the mid-1970s. The blue line shows the price of natural gas multiplied by 5.8 to approximate the same amount of energy contained in a barrel of oil. The fact that natural gas provides energy for pennies on the dollar will translate into an expanding natural gas industry.
The EIA predicts global demand for natural gas will grow from 340 billion cubic feet per day (Bcf/d) in 2015 to 485 Bcf/d by 2040. China’s transition away from coal will account for most of this increase.
Gray Cardiff, Sound Advice, www.soundadvice-newsletter.com, 800-825-7007, August 1, 2018