Jim Letourneau's Blog

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Crude Oil vs. Natural Gas

Recent posts have shown the charts of crude oil and natural gas prices. The devastation caused by Hurricane Katrina has not caused a massive run up in oil prices. However, natural gas prices broke through long term $10 resistance. It might be time to lighten up on oil producers and start digging around for companies that are natural gas weighted.

A strong natural gas market is going to keep the oilfield service companies hopping this winter. Even if oil prices pull back to $40-50/bbl there will still be great incentive for producers to take advantage higher than expected prices.

Much of the growth in North American natural gas drilling will be in what were previously considered unconventional targets (coalbed methane, tight gas and shale gas). Companies that provide specialized services for unconventional gas drilling are going to be extremely busy.

Not Advice

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