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News Letter Reviews More Upside Than Oil?
News Letter Reviews More Upside Than Oil? 
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| Two months ago, the yen was at 123 to the dollar. On Friday it climbed to 111. Currency volatility has doubled since June and taken out the time-tested strategy of the “Yen carry trade.” | |
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| More Upside Than Oil? |
| Tuesday, 27 May 2008 | |||||||||
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Oil is doing a great job of taking all the headlines. Momentum recently caused oil to surge past $130 a barrel. But how much upside is really left? There can’t be that much in the near term. After all, the $130 price tag is the top price paid by the highest bidder in the world, whether it’s China, India or any other oil-importing country. Oil is traded in a very transparent market.  The natural gas market isn’t nearly as transparent. We pay about $11 per MMcf of natgas in the United States. China, however, recently inked a deal to pay $19 per MMcf of natural gas. In oil terms, that’s the equivalent of the U.S. paying $130 per barrel and China paying $225 per barrel.
Something would have to give right? The problem is the global natural gas market isn’t nearly as fluid as the oil market. As a result, we can simply look over the world to see the potential upside of natural gas. And in this case, there is 74% more to go until North American natural gas prices match those Asia is willing to pay. As you can see in the chart above, natural gas is experiencing the same kind of growth in demand as oil is. Yet, the huge run-up in prices just hasn’t come… yet. Oil may continue to go higher, but when you look at investments, you always have to look at the upside. And right now, natural gas has a good bit more upside. Good investing, Andrew Mickey Editor in Chief, BreakAway Investor
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