GSE Market Summary

Natural gas prices hit an 11 month high yesterday – inventories have declined due to cold weather throughout Midwest/East.  Crude has dropped off to $70 this week from a peak of $82 in early November and a low of $46 in March.  Crude has been trending up most of the year due to the devaluing of the dollar which has resulted in an influx of investment in commodities as a hedge against potential inflation.  Historically, the typical trading multiple between crude and natural gas is 6X.  We are currently experiencing a multiple of greater than 13X (Crude - $69.70 / Nat Gas - $5.35).  Based upon historical trends, industry experts expect the trading multiple between crude/nat gas to decrease.  With increased government spending, we are experiencing continued downward pressure on the dollar and ultimately inflationary risk.  In summary, energy experts feel there is a high probability of natural gas prices continuing to increase in the near term (despite high storage levels) to further close the gap between the historical trading multiple.