It has been a brutal six months for United States Oil (NYSE: USO), a major exchange traded fund for oil, and United States Natural Gas (NYSE: UNG), a major exchange traded fund for natural gas. Over the last six months, United States Oil has fallen by more than 50 percent (chart below). It is much the same story for United States Natural Gas. For the same period, United States Natural Gas has plunged by more than 30 percent.
But the outlook is more bullish now due to news from Washington, DC.
The United States Government has approved the export of lightly processed crude oil by Royal Dutch Shell (RDS-A). As the second largest energy entity in the world behind only ExxonMobil (NYSE: XOM), whatever Royal Dutch Shell does and happens to it is important for the global oil and natural gas market. Similar moves by ExxonMobil and others can be expected.
This is especially bullish for United States Natural Gas and United States Oil.
The market for energy assets in the United States should improve even more as a result of this recent move. Already, the North American energy market is the strongest in the world. Allowing for exports will make it even more attractive. That will bring in additional investors into oil and natural gas assets. From that, the price will rise.
No surprise there: the basic fundamentals of supply and demand for work as it functions for any good or service.
That should take the price of United States Natural Gas and United States Oil higher in the long term. The short term outlook is a mess. The past six months have been punishing those owing shares of United States Natural Gas and United States Oil. With greater exports coming from the United States, the future looks better for United States Oil and United States Natural Gas.