Every morning in our Morning Update for clients we pass along a quick screen of important long-term spreads in the natural gas market as well as comparisons of natural gas to crude and heating oil prices. This page (seen below) comes alongside our morning weather forecast, natural gas technical analysis, and a look at the front 18 contracts along the natural gas strip.

After today’s price action, where natural gas prices reversed to settle near flat on the day and oil prices continued higher, it seemed like divergence between natural gas and crude prices grew.

The same can be said for heating oil.

Yet it would appear much of this just depends on the timescale. Divergence over the past year definitely seems to have increased. Yet when looking at a chart of the past 5 years, it would seem that natural gas prices are finally falling back to the exact levels where they would be fairly valued against crude.

Much thus depends on the timescale that you are looking at. On a short-term basis, there certainly seems to be divergence between oil and natural gas, but the longer-term picture would seem to indicate that such divergence is inconsequential.