I heard this morning that Exxon/Mobile is buying XTO for 31 billion because they want entry into the US Natural Gas market. After a little Googling I found this article on Bloomberg.
Basically, Exxon thinks that due to emission regulation coal power plants are going to switch over to natural gas. Currently there is an oversupply of natural gas which cause a huge crash in prices over the summer and even with the winter weather gas prices haven’t rebounded to their historical 10% of oil prices.
I think this is probably a good thing in the long run we have a large amount of gas in the country and if we start using more it should take some of the pressure off of oil prices. The fact that a large player like Exxon not only believes this but is reentering a market that they had completely abandoned show, at least to me, that this could be the start of a long term trend.
So what do you guys think this signals, if anything?