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Back in late July, we highlighted that oil was significantly outperforming natural gas and that "either oil had further to fall or the selloff in natural gas was overdone." Since then, natural gas has significantly outperformed oil, even though both have fallen. Below we highlight the ratio of oil to natural gas since 1990.

When the line is rising, oil is outperforming natural gas, and vice versa for a declining line. Back in July, the ratio got to its highest levels in years, and since then, the ratio has come in quite a bit. At the moment, the ratio is just slightly lower than average, and it needs to fall quite a bit more before a major reversal would be expected. As shown in the bottom chart below, natural gas is down 26% year to date versus a 53% decline in oil.

click to enlarge

Source: Ratio of Oil to Natural Gas Falls