By Editorial Dept
Arbitrage is one of the simplest ways to make big money.
Take something worth little and move it to a place where itís worth a lot.
In the past, such strategy has made billions for oil traders. Moving crude from developing nations with big production but little domestic market to energy-hungry buyers in North America, Europe and Asia.
But thatís getting harder to do in todayís globalized oil market. Crude today can sail between nearly any two points on the globeóvery efficiently. Which has closed a lot of the big geographic differentials in pricing.
So, where to next?
Many investors have focused on the arbitrage opportunities in natural gas. After all, U.S. natgas is going for $4 per mcf, while the same unit in Asia would fetch $15.
Thatís indeed an attractive pricing opportunity. The challenge is logistics. America isnít set up to export gas in large quantities. Doing so requires myriad permitting, and the construction of new facilities to liquefy and load gas supplies.
That means big profits here are likely still years away. But thereís one little-known market thatís beckoning with triple-digit arbitrage upsideóone where the gains are already happening, under the nose of the investing public.
Natural gas liquids, or NGLs.
NGLs prices have grown to big differentials in Europe and Asia versus America. Just look at propane. While prices in the U.S. are currentlyÖ