Futures File: Oil and natural gas prices diverge
November 24, 2018
Oil and natural gas are the United States’ two primary fuel sources, accounting for almost 60 percent of U.S. energy demand. However, the two fuels aren’t easily interchangeable, which can lead to wide market divergences like the ones seen over the past few weeks.
Since early October, crude oil prices have collapsed almost 30 percent to a one-year low, while natural gas has exploded over 50 percent higher, to near a four-year high.
Oil is suffering from overproduction of petroleum, both domestically and abroad, which knocked the market to about $50 per barrel by Friday.
Meanwhile, natural gas is facing a tight supply as weeks of cold weather are cutting into supplies nationwide. Last week, American demand outpaced production by 134 billion cubic feet, far more than anticipated. This leaves stockpiles at a relatively meager 3.113 trillion cubic feet, a potentially precarious position ahead of winter.
Fears of ongoing cold weather have helped sustain natural gas prices, which stood last week near $4.50 per million British thermal units...
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