Bill Herbert

Today in Commodities: A Fitting End

Matthew, or anyone -

I've been holding off valiantly on the long nat gas / short crude oil trade for the past two months. With the ratio now around 26.3 to 1 as of the close on Friday 8/21, I can't stay away from it any longer.

I know we have an enormous NG glut and I also know that demand is likely to remain stagnant for at least the next few months, as we get into milder weather and slack industrial usage. It could get ugly, but I will be surprised if the Crude-to-NG ratio can go beyond 30-to-1.

I'm wondering if anybody has some insights as to how to most effectively position the account in terms of moderate risk, a hedged position, and reasonable use of leverage. I want to be there when the spread comes in, and I would love to triple my invested money in a few months from riding the position, and the move may occur quite suddenly and violently depending on world events and/or a big hurricane.

Any constructive thoughts would be appreciated,

thx