The ratio of oil to natural gas prices has been steadily increasing despite positive economic data and speculation about potential inflation and pricing pressure on energy. The largest natural gas exchange traded fund (ETF) has been reflecting this odd pattern by losing more than 50% during the past year.
Since 1995, the ratio of oil to natural gas prices has been in the range of five to 15. Recently, however, the ratio has soared above twenty-five, reports Kurt Brouwer of MarketWatch. This means that the price of oil is getting more expensive in relation to the price of natural gas. [Contango: What It Is.]
Looking at the performance of United States Oil Fund, LP (NYSE: USO) versus United States Natural Gas Fund, LP Unit (NYSE: UNG), you can see a similar tendency.