The Crude-Oil/NatGas Markets: The 'Message from Markets'

Ehud Ronn

As Richard Brealey, Stewart Myers and Franklin Allen tell us in their renowned textbook Principles of Corporate Finance, "If [financial markets are] efficient, prices impound all available information. Therefore, if we can only learn to read the entrails, security prices can tell us a lot about the future." I explore and attempt to interpret the "message from markets" in the energy markets by considering the level and slope of the futures curve, and the volatility implied in options markets, in the financial markets for crude-oil and natural-gas markets.