De-Coupling of Natural Gas from Crude Oil
Let's begin by examining natural gas price behavior relative to that of crude oil prices. Once upon a time, crude oil prices were highly correlated to natural gas prices. If crude oil prices increased or decreased, so did natural gas prices. After all, both natural gas and crude oil are hydrocarbons found in similar reservoirs and surfaced using similar drilling techniques. They are often extracted together, incurring similar pricing and cost structures. Not so fast. Today, that's where they begin to diverge.
In terms of market pricing, the most significant decoupling of natural gas pricing began in 2008 after the financial crisis. During the bull run of the crude oil markets in 2006 to 2008, U.S. natural ...
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