Natural gas has always been less expensive than crude oil. But
today, the market is putting a huge value on crude while
considerably discounting natural gas.
That discrepancy creates a ripe profit opportunity for
investors who love to buy low, and sell high. Let me explain…
Natural gas, trading at $3.60 per million Btu (MMBtu), is
trading at a historically low price. Specifically, natural-gas is
priced low - very low - relative to oil.
This is good news for anyone interested in buying low. Natural
gas is morphing into an oil alternative, which makes the spread
between the two energy sources extremely compelling.
The spread between West Texas Intermediate crude and natural
gas is near a historical high. The spread, currently at 28, means
a barrel of WTI crude costs 28 time more than one MMBtu of
The spread was higher only once before - back in 2012. And
that was a true outlier. Natural gas prices had pushed
below $2.00 as new fracking technologies led to an unprecedented
increase in natural gas supply, which swamped the market and
crushed the price.
Natural gas at $2.00 is unprofitable for everyone. Producers -
being rational agents - naturally cut production and natural-gas
prices quickly recovered.
I see little impetus for natural gas to challenge last year's
low. I say that because the breakeven price for producers in the
most efficient shale properties is between $3.25 and $4.00. When
natural gas falls below $3.50, producers reduce production. And
this creates a "floor" for the price of natural gas.
On the other side of the coin, West Texas Intermediate crude
continues to hold above $100. And that's likely to continue.
WTI crude demand is surging due to the ongoing fracking
expansion. At the same time, it's become evident that the OPEC
nations are less able to serve growing global demand due to
geo-political disintegration of the Middle East.
In short, both natural gas and WTI crude have a price floor
neither is likely to break.
Natural gas' low price relative to oil naturally motives a
switch to the lower-priced fuel. Indeed, that's the case. An
American Gas Association study shows that more than 500,000
houses in the Northeast switched from oil to natural gas for
their primary heating fuel between 2000 and 2010.
More houses will follow: Last winter, despite abnormally mild
temperatures, it cost the average Northeast homeowner $2,087 to
heat his home with oil. It cost the same average Northeast
homeowner only $832 to heat his home with natural gas.
But there is an even bigger opportunity to exploit the
natural-gas price advantage…and that's in
Transportation company fleets are ripe for a switch.
Transportation-dependent firms like Waste Management (
), Ryder (
), FedEx (
), and United Parcel Service (
) have already converted a large portion of their fleets to
natural gas. And they're saving millions on their fuel
The potential for more conversions is enormous, particularly
for diesel-powered vehicles. The
Wall Street Journal
reports that 3.2 million big rigs burn 25 billion gallons of
diesel annually. Almost seven million single-unit trucks, similar
to those used by UPS and FedEx, consume another 10 billion
gallons of diesel.
The investment team at Wyatt Investment Research views natural
gas as one of the best value and growth opportunities of the next
decade. And we want to help you profit from this huge growth
My colleagues - Ian Wyatt and Tyler Laundon - are holding a
live investing seminar to discuss the rapidly unfolding
developments and profit opportunities. This live investing
seminar takes place over the phone
today at 2pm Eastern Time.
The event is called
U.S. Energy Alert: 3 Profit Plays for 2014 and
I know Ian and Tyler will be sharing details on their favorite
investment opportunities, including details on two of their top
If you'd like to be our guest at this free investing seminar,
you must RSVP right now. Registration closes in just two
hours, and I want to make sure you are able to attend.
Just click here now to reserve your seat -