It is the Season for Debate: Heating Oil vs Natural Gas

The first frost is just around the corner and with that a long Winter season with lots of snow and ice, and cold temperatures, unless you are smart enough to live in the South or California. In the North East this also means a ramp up in spam and junk mail about the benefits of Heating Oil over Natural Gas and vice versa. Since they both work to heat a home and Natural Gas has been cheaper this is a no brainer choice for me and probably many other. But if you still need an excuse to change your home heating system from Heating Oil to Natural Gas how about looking the price action in both fuels. Below is a weekly ratio chart of Natural Gas ($NG_F) against Heating Oil ($HO_F). This is a very basic analysis. The trend in the chart is clearly lower with the price of Natural Gas falling in relation to that of Heating Oil. There are 3 trend lines drawn on this chart over the last 5 and a half years. Each one is getting progressively steeper, meaning the trend is

accelerating lower. After 5 and a half years Natural Gas is still getting cheaper than Heating Oil and at a faster pace. What is more this trend has actually been going on for 10 years! The other technicals suggest that it will continue as well. The Relative Strength Index (RSI) remains under 50 and is falling. It has been bearish since January 2009. The Moving Average Convergence Divergence (MACD) indicator is flat. It has played out and is giving no signal. So tell me if you are heating your house with Heating Oil what are you going to do this Winter?

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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