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.
How to invest in natural gas?
To invest in natural gas nowadays you simply need a computer that is connected to the internet. In fact, all the online trading platforms provided by CFD brokers offer you the opportunity to trade in fuel commodities such as oil and gas without needing to leave your home or trade through a bank.
Using CFDS you will be able to take position on the purchase or sale of the price of natural gas and close your position when the price has moved sufficiently in the predicted direction to ensure you profit from the difference in the rates.
Fundamental analysis of the price of natural gas in real time:
Of course, technical analysis should not be the sole data used when analysing the price of natural gas in real time. You should also take fundamental information into account that influence the price such as factors that influence the production, or import policies relating to this fuel on the global level.
The indicators to follow for trading in natural gas:
To trade in natural gas as a stock market asset you will need to know and correctly interpret the most pertinent indicators. You will need to take into account a number of major influential factors such as the following:
- 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.
- 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.
- 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.