Replies to post #87 on The Rising Influence of Rising Affluence

[DewDiligence]

Re: WTI/NG ratio

In addition to all of the factors you covered, the continuing development of LNG capabilities will facilitate arbitrage of the disparate prices for NG is various parts of the world. This will help move the market’s WTI/NG ratio closer to the underlying 6:1 caloric ratio, although this 6:1 lower bound will probably never be reached. JMHO, FWIW

[DewDiligence]

Addendum to #msg-38592028 re WTI/NG ratio:

‘old man’ et al: something I read recently (possibly from one of your references) said that the average value of the WTI/NG ratio over the past two decades has been 8.6. I mention this because: i) 8.6 is within the 8-10 range mentioned in #msg-38528847; and ii) articles in the lay press sometimes cite 6x as the “normal” value, when it plainly isn’t (and shouldn’t be).

[DewDiligence]

The oil/NG ratio is at an all-time high of 25x. So much for my assertion that the 18x level in June was unsustainably high :-)