Difference in Oil and Natural Gas Hits 18-Year High

The ratio of crude oil to natural gas futures prices on the New York Mercantile Exchange reached their highest level since mid-July 1991 during yesterday's trading session. Oil closed the pit session at $68.09 / bbl and Natural Gas closed at $3.731 / million BTU for a ratio of 18.25 to 1 between the commodities. So far this morning, both commodities are trading up with the ratio roughly the same.

  • Looking at data going back to early June 1990, the average ratio of crude oil to natural gas futures prices stands at 9.256
  • Earlier in the session yesterday, this ratio hit as high as 18.55
  • The last time this ratio crossed above 18.55 was in July 1991

The divergence of these energy commodities has some investors believing a price correction could be in place. Indeed, the average price for natural gas in the past twelve months was $6.511 / million BTU, while the average price for crude oil over the same period stood at $74.61. The five year averages for the two are $7.495 and $68.50 respectively. If they were to move to their averages, natural gas will have a significant move. Here are some companies that could benefit from a rebound in natural gas prices:

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