Analysis of the price of natural gas on the stock market

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Among the commodities that can be traded online through CFD broker platforms, natural gas is particularly popular. We will therefore devote this article to how to analyze the price of natural gas online. We will first review how the gas market works and explain how you can now perform technical and fundamental analyzes on its price.  

Elements that can influence the price of this asset:

Analysis N°1

Global fuel demand which itself depends on the economic health of households and industry. Industrial growth and recession exercise a strong influence on the rise or fall of the price of gas.

Analysis N°2

The price of oil also strongly influences the price of natural gas. The higher the price of black gold so the higher the price of natural gas. Natural gas is also correlated with coal but to a lesser degree.

Analysis N°3

The value of the American Dollar as compared to other major currencies also influences the price of natural gas which is generally quoted in this currency. When the value of the dollar falls this often provokes a rise in the gas price.

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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:


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.

Frequently Asked Questions

On which markets is the price of natural gas quoted?

Natural gas is quoted on the so called ‘over the counter’ markets. Before, trading in this commodity was conducted through long term contracts, some of up to 30 years, between countries or national companies. However, natural gas is also traded on two major financial marketplaces. The price of this commodity is quoted on the NYMEX, or New York Mercantile Exchange, as well as the IPE, or International Petroleum Exchange in London.

What factors influence the price of natural gas?

Natural gas and its market price can be influenced by various different factors, notably the price of crude oil and that of other hydrocarbons in the same market it is indexed. But other factors can also influence the price such as geo-political factors as was the case with the Russian pipeline crisis, climate factors, global economic activities or even seasonal elements.

Should you buy or sell natural gas?

To know if you should take a buying or selling position on the price of natural gas you will first need to complete precise and comprehensive analyses of this asset price. You should therefore concentrate your attention on the fundamental factors that could lead to price movements and the technical stock market charts displaying movements you can observe.

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