Natty Gas/Oil BTU spread

Discussion in 'Energy Futures' started by runningman, Jul 1, 2007.

  1. Anyone know of any charts of the Natural Gas/Oil BTU Spread? Its getting very large now, I'm just wondering how that compares to its historical norms.
     
  2. Old Ratio is 6:1

    Natty price*6
    or
    crude price/6

    that ratio has been de-coupled for awhile now. I have seen many a trader get hammered trying to play that over the last year-and-a-half.
     
  3. I think technically its 5.8 times NG, but 6 is close enough. Have you seen a chart or historical highs/lows on the ratio?
     
  4. HLB

    HLB

    say, one want to play this with QM and QG
    How many QG contracts he should go long and how many QM short?

    QG's multiplier 2500
    QM's multiplier 500

    2500*QGprice*numQG = 500*QMprice*numQM

    QMprice = 6*QGprice ?

    QM price AUG = 71.800
    QG price AUG = 6.615

    2500*6.615*numQG = 500*71.800*numQM

    numQM / numQG = (2500*6.615) / (500*71.800) = 0.46

    numQM = 0.46*numQG

    So,

    sell 1 QM and go long 2 QGs (or 1 NG) ?
     
  5. Here's how I read it:
    1 CL = 6 NG
    1CL = 2 QM
    1NG = 4 QG

    so 2QM = 24QG

    1 QM= 12 QG

    So you would buy 12 QG and sell 1QM

    someone check my math.

    ps anyone in this trade right now is getting steamrolled.
     
  6. HLB

    HLB

    6:1 isn't ratio between number of contracts, but between price of n. gas to price of crude oil.

    So it,
    sell 1 QM long 2 QG
    or
    sell 1 CL long 1 NG