Our other special focus this week is on Natural Gas. Despite the political and fear issues present in today’s market, the price of natural gas seems to be staying a lot more stable than that of oil. Analyst Fadel Gheit of Oppenheimer & Co. Inc. says why:
TWST: Why haven’t we seen the same reaction in gas prices, given all the political and fear issues that have boosted oil prices?
Mr. Gheit: Natural gas is more of a regional commodity; oil is more global. Any international crisis will have an impact on oil prices, but obviously would not have the same impact on natural gas prices. The disparity between gas prices from different regions is magnified significantly higher than the disparity in oil prices. For example, the gas price in Argentina is between $1 and $1.50; the gas prices in the US and Europe are between $6 and $7. The gas price in Equatorial Guinea or West Africa in general or in the Middle East could be less than $0.50 or even lower… It is basically infrastructure and the lack of transportation that makes gas more regional. The prices are determined by supply and demand based on a regional, not on a global basis.
For the full interview with Mr. Gheit, including a complete overview of the market climate for natural gas and stock picks, click here.
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