Here is an interesting article just released by Bloomberg.
March 10 (Bloomberg) -- Natural gas in New York advanced, erasing an earlier decline, after crude oil rose to a record $107 a barrel.
Oil surged as investors sought higher returns available in commodities than in the equity markets as the Standard & Poor's 500 Index and Dow Jones Industrial averages declined. Oil has risen 81 percent in the past year and natural gas 41 percent, while the Dow has fallen 3.5 percent and the S&P 500 8.2 percent.
``It's one unified investment theme now, the state funds, the pension funds'' are buying commodities, said Tom Orr, director of research at Weeden & Co. in Greenwich, Connecticut. The price relationship between crude oil, gasoline and natural gas has tightened, he said.
Natural gas for April delivery rose 1.6 percent to $9.933 per million British thermal units at 1:21 p.m. on the New York Mercantile Exchange. Were gas to close at this price, it would be the highest since Jan. 4, 2006, when it settled at $10.197.
Crude oil for April delivery climbed $2.30, or 2.2 percent, to $107.45 a barrel in New York. Oil earlier touched $107.85, the highest since trading began in 1983.
Many investors ``are trying to play the energy space as an asset class,'' said Orr.
More pension funds and other money managers plan to have in excess of 10 percent of their portfolios in commodities in the next three years, Barclays Plc said.
Thirty-four percent of about 260 investors surveyed at a conference in Barcelona last week said that more than 10 percent of their portfolios would soon consist of commodities, Kevin Norrish, director of commodity research, told reporters in London. That's up from 22 percent of those surveyed a year earlier and 19 percent in 2006, he said.
LNG
Higher demand for liquefied natural gas from countries such as China has reduced the number of cargoes coming to the U.S., putting increased pressure on U.S. inventories, said Orr.
Average imports ``could be below 2 billion cubic feet a day'' for 2008, he said. LNG is natural gas that has been cooled to a liquid state so that it can be put on ships and transported to markets not connected by pipeline.
March cargoes are averaging 800 million cubic feet a day, less than one-third the daily average a year ago,Stacy Nieuwoudt, an analyst at Tudor, Pickering, Holt & Co. Securities Inc. of Houston, said in a note today.
January and February shipments were about half those for the same months in 2007 as demand spurred gas prices in Europe and Asia, attracting cargoes to countries in those regions.
-- With reporting by Chanyaporn Chanjaroen and Saijel Kishan in London, and Reg Curran in Calgary. Editor: Theo Mullen.