Rare Petro

The dual black swan events of the COVID-19 pandemic and oil price war have created a unique analytical opportunity within petroleum products. As oil prices crash, the natural gas prices have largely remained unchanged. This is due to the markets in which the commodities are used. Transportation which is the main use of oil has almost entirely stopped, whereas electricity generation and heating, the destination for most natural gases has remained similar to pre-2020 levels. The market has priced these assumptions relating to production and usage demand into the futures prices showing the oversupply of natural gas is expected to correct faster than that of crude oil. Factors for these assumptions include the sources...

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