Oil versus Natural Gas
Oil ticked over $75 today. Long time readers know I have long been bullish on Energy, Oil, and the Agricultural sectors. But what happens when some of the components within a strong sector start to diverge from each other?
Michael Panzner sends along this interesting comparison between natural Gas and Crude Oil. Typically, there is a normal ratio between the two.
In recent months, crude oil and natural gas traced out a pattern similar to what happened last year: the former rallied to new highs, while the latter drifted to new lows. Months later, the divergence corrected itself, with oil dropping precipitously and natural gas having a modest bounce.
So which is it . . . ?
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» Canoro Resources Ltd. (CNS)TSX:V from quantuminvestmentblog.com
As I go about my daily activities many stocks cross my plate, most dont warrant a second glance, some get a second glance. Rarely one will cross my plate, that will repeatedly compel me to look some more. Canoro Resources is one of those rare on... [Read More]
Tracked on Sep 12, 2007 3:39:39 AM
Nat gas oversold, perhaps reflecting weakening industrial demand coupled with the continuing lack of LNG facilities in Gulf Coast that would allow greater export of US LNG. Crude oil overbought reflecting continuing demand from BRIC and the never-ending geopolitical risk premium.
Bottom line? Long UNG as a relative value/reversion to mean play and hope for a cold winter and a cat. 5 hurricane?
Posted by: johntron | Jul 16, 2007 3:46:37 PM
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