The natural gas market and its operation:
Natural gas is a combustible fuel that is generally traded in Europe between the companies that produce this gas and those supplied using contracts of a period of between 5 and 25 years. But this commodity is also traded on the international level through different markets such as the NYMEX (New York Mercantile Exchange) and the IPE (International Petroleum Exchange) which makes speculating on its price possible and highly profitable.
The price of natural gas is therefore quoted in real time on these markets as are those of other energy commodities and is subject to influence from speculation and other well known exterior factors such as the following:
- The price of crude oil heavily influences that of natural gas as these two are often in direct competition.
- The value of the U.S. Dollar, the currency used for trading in natural gas on the international markets, also exerts a strong influence on its price movements.
- The natural gas production figures can also fluctuate which will of course have an effect on its price too.
- Finally, the strength of the demand for natural gas does of course play a major role in the determination of its price.
A pertinent analysis of the price of natural gas in real time:
To trade in natural gas in real time you should of course use pertinent charts which are available from most popular trading platforms. By configuring the charts according to the type of trading you wish to practise you can view the rates in real time as well as the historical prices and noteworthy movements.
Certain tools integrated in these charts also enable you to easily identify important points such as the support and resistance levels, moving averages or pivot points.
The quotation of natural gas on the stock markets:
There are two major stock markets where natural gas is traded. The primary stock market is the NYMEX, or New York Mercantile Exchange, in the United States, the second is the NBP, or National Balancing Point of the IPE, or International Petroleum Exchange, which is situated in London. There are other smaller markets too such as the TTF in Holland and the Zeebruge Exchange in Belgium.
However the natural gas that you are able to trade online is that quoted in dollars on the NYMEX exchange.
The price of natural gas is influenced by various factors including of course the price of oil which remains the principal reference in terms of fuel commodities, but also the rate of the American dollar which is the currency used to quote the price of this commodity.
A historical analysis of the price of natural gas on the stock markets:
A historical analysis of the price of natural gas informs us above all of the strong volatility of this asset. We can in fact note that over the last five years there have been a number of major successive rising and falling trends.
The most recent rising trend started in April 2012 and ended in February 2014, reaching a historical peak of around $6.151. Since this time a new falling trend has appeared on the fuel market in general. This fall is still continuing at present and may continue over the mid to long term although this asset remains profitable over the short term.
Why are traders interested in the price of natural gas?
If investors are interested in the natural gas market nowadays, it's because they anticipate a positive development of this asset. They argue that natural gas is an energy of the future, which suggests that its price has a good chance of strengthening in the years to come, although this obviously remains to be verified.
These hopes are based on the fact that this fossil fuel is the least polluting on the market nowadays which is a real asset when the world is in the midst of an energy transition with regard to environmental issues. In fact, natural gas produces up to half as much Co2 as other fuels and is available in large quantities underground with the added bonus of significant potential for discovering new deposits.
Moreover, we are also heading towards a significant development of renewable gas and hydrogen. This especially relates to biomethane which is obtained by the fermentation of organic matter and has the same properties as natural gas. There are also interesting projects concerning power-to-gas, which consists of transforming the electricity produced in excess by renewable solutions such as wind or solar power into hydrogen or synthetic methane which can then be stored and used later.
According to the energy transition law, the renewable natural gas stock should reach 10% by 2030 and the gas networks hope for a share of 30% around the same time. Therefore, natural gas in its classic form is hoping for interesting growth. For your part and in order to assess the possible future for natural gas, you need to carry out more in-depth analyses of this value.
