The Volatility of Natural Gas

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The current free fall in the NG market is more in sympathy with the falling oil. This drop may not go too far below the current $9 level, probably $8 - $8.5 range should provide a good support...The current drop of NG provides a good buying opportunity for investors with a long term horizon, if they believe that the long term trend on the oil market is intact and only under correction, and oil will stay at 3 digits and go back up to higher high in the future...Thomas Tan

My focus is mainly in the precious metal sector for the last several years. But I have also been bullish on natural gas for a while. Natural gas is a very volatile market, possibly more so than any others such as oil or metals. But from long term perspective, it correlates closely with oil, since a BTU of energy at the end of the day, is a BTU, and it doesn't matter too much whether it is coming from oil or natural gas or other forms. But from time to time, it can deviate substantially from oil. Like right now, if we look a multiple year gas/oil ratio chart that gas/oil is at the bottom of the trading range today...

The current free fall in the NG market is more in sympathy with the falling oil. This drop may not go too far below the current $9 level, probably $8 - $8.5 range should provide a good support...The current drop of NG provides a good buying opportunity for investors with a long term horizon, if they believe that the long term trend on the oil market is intact and only under correction, and oil will stay at 3 digits and go back up to higher high in the future. The historical oil/gas ratio fluctuates between 4-12, with average about 7. Based on this, even if oil is at $100, I wouldn't surprise to see NG go back to $15 next year, with average price above $10 in future years...

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