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Oil, gas ratio up

Oil, gas ratio up

crude oil Mining Zimbabwe

The diverging fundamentals of US oil and natural gas can be seen dramatically in the markets, where the oil-to-gas price ratio has surged to its highest in six years.

The oil-to-gas ratio, or the level at which oil trades compared with natural gas, recently reached 30-to-1, and could increase further as analysts expect average gas prices will fall for a second consecutive year in 2020 to their lowest level in over 20 years.

That is because most US drillers are not looking for gas.

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Companies like EOG Resources Inc (EOG.N), Pioneer Natural Resources Co (PXD.N), Diamondback Energy Inc (FANG.O) and Exxon Mobil Corp (XOM.N) are mostly seeking more valuable oil and natural gas liquids, which bring with it a lot of associated gas, making producers less sensitive to gas price declines. — Reuters.

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