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Divergence in Fossil Fuels

Started by pkamm, 08/01/2009 04:19AM
Posted 08/01/2009 04:19AM | Edited 08/01/2009 04:20AM Opening Post
So think about this -- because of growing inventories this summer, natural gas has crashed further than just about anything else and has not participated in the recent commodity rally. A barrel of oil typically is about 9-10x the price of 1000 c.f. of natural gas. Right now that ratio is about 19.0x! On a cost per btu basis, natural gas has now become one of the cheapest fuels out there. Or conversely, oil is way overpriced on a relative basis.

Then there's seasonal factors: over the last 23 years, natural gas prices find bottom most often in the July-Sept quarter, and most often peak in Dec-Jan.

Analysts have been predicting a bottom around October but I'm thinking the expectation is making it bottom now. Comments?
Posted 08/01/2009 11:38AM #1
Buy NatGas Sell Crude in equal dollar amounts. Use 5% of your portfolio assets as a stop loss point, and call me when its over, I can't stand to watch!!