Oil prices relative to gas

June 2016

Oil vs gas prices

  • The spread between oil and natural gas prices continued to diverge. Brent and related oil products such as gasoil (diesel) have staged a modest recovery while natural gas prices are being constrained by a seasonal slackness in demand.
  • The price premium of gasoil over natural gas at the NBP has averaged around $5.90/MMBtu in June so far. This is little different from May, when prices strengthened by around $0.80/MMBtu from the April average.  The spread widens along the forward curve – from around $5.90/MMBtu currently to $6.50/MMBtu 24 months ahead – reflecting a bigger potential ahead for the recovery of oil prices relative to gas.

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