Investing in Natural Gas

Natural gas is found it the same type of geological formation as crude oil and frequently does not come on its own but as a by-product of oil extraction.

There are three distinctly different gas markets that are only loosely linked because transport of gas is dominated by pipelines and only a small portion of gas travels across the oceans. In North America both the US and Canada are large consumers and most of the gas there travels to Henry Hub in Louisiana, which is the connection point for 13 different pipelines.

Europe is supplied by Russia, the UK, Norway and the countries of the Middle East. Japan buys liquified natural gas or LNG from the US, Russia and the Middle East.

What affects the Natural Gas price?

Most natural gas is used for domestic and commercial heating, power generation and manufacturing. The highest demand for gas is therefore in the winter months and to a slightly lesser extent in the summer when it is used for cooling. Spring and autumn are typically the periods of lowest gas prices. It is worth keeping an eye on the weather in the US as well, because extreme colds or a prolonged winter can boost demand and prices.

Natural gas prices have been going through a period of a slump which was partially brought on by the fact that US producers developed shale gas technology that allows them to drill for gas horizontally rather than only vertically. This has massively increased the level of production in the US and has created a glut in the market. European countries, particularly Poland, are looking to use the same technology to increase their output of gas. Shale gas technology seems here to stay and unless there is a large new area of demand, natural gas prices could stay flat over years to come.

How is Natural Gas transported?

In the past if there was no way of transporting natural gas – it was cheaper to flare off or burn the gas at the wellheads than attempt to store it. This is still done in some African countries but because of environmental damage the practice is becoming less and less common. Today most gas is transported by pipeline.

Another way of transporting gas is by liquifying it, achieved by cooling it to -162 C. When liquid, gas takes up 600 times less space and can be transported in specially designed tankers that have reinforced walls designed to withstand the much higher pressure. Japan, being an island, is the biggest consumer of this type of gas.

Is there an OPEC-style cartel for Natural Gas?

In the past the world’s largest producers, Russia, Qatar and Iran looked into forming the equivalent of a gas OPEC – a gas producers’ cartel – with the view of controlling output and prices, but this proved unfeasible because of the long term nature of supply contracts and because of the different political motivations of the countries in question.

How can I trade Natural Gas?

For those interested in trading natural gas markets, the key guide price will be NYMEX natural gas futures. The futures are quoted in 10,000 million British thermal units (mmBtu) for delivery via the Sabine Pipe Line at Henry Hub in Louisiana. Natural gas futures are also traded in Europe on the Intercontinental Exchange but turnover in 2010 was 2.1 million lots compared with 64.3 million lots on NYMEX. This means that prices are dominated by the supply and demand dynamic in the US and the local demand there for heating and power generation.

Natural Gas ETFs

European Natural Gas	Theme: Natural Gas Ticker: LON:TTFW Currency: EUR	Buy Here

Natural Gas	Theme: Natural Gas Ticker: LON:NGAS Currency: USD	Buy Here

Natural Gas 3x Daily Leveraged	Theme: Natural Gas Ticker: LON:3NGL Currency: USD	Buy Here

Natural Gas 3x Daily Short	Theme: Natural Gas Ticker: LON:3NGS Currency: USD	Buy Here

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Latest Natural Gas News

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The new regime in Syria has the potential to radically transform the dynamics of the European natural gas futures market, analysts say.

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16th October 2023
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Will economic data and US earnings move the dial or will newsflow from the Middle East consume attention and direct sentiment?

Is the Natural Gas trade starting to look interesting as weather gets colder?

11th October 2023
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It's the time of year when the natural gas market starts to wake up. Have European governments adjusted to the new reality in gas markets?

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Natural gas futures prices have been testing heights not seen since last summer as traders focus on some supply issues.

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Stavros Lambouris of HYCM International makes the case for the potential rise in the price of oil for the remainder of the year

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17th August 2023
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Analysts are seeing some major shifts in the price action for both crude oil and natural gas prices in the next few weeks.

European gas futures prices are still on a roll

30th June 2023
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UK gas futures are still powering higher, trading up 37.5% on the month, despite forecasts for a sharp decline.

Norwegian outages powering the rise of gas futures short term

9th June 2023
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8th February 2023
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Deltic Energy confirms what could be the biggest gas find in the Southern North Sea in over a decade as test drill comes up positive

iGas potential O&G winner as it moves to hydrogen and geothermal

24th January 2023
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iGas Energy could have a good year if gas prices remain high and the trend to decarbonise remains as it develops renewable strategy

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20th December 2022
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France has led the way in terms of cross-border energy cooperation in Europe as the winter energy crisis caused by the Ukraine War bites

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Experts talk to The Armchair Trader about the main impact on investors and on the wider financial markets of the UK autumn budget.

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28th October 2022
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The mild and windy European autumn has tampered with the expected seasonal demand for gas which has seen prices fall to 2021 levels

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As the price cap sees an 80% rise in expected bills for UK consumers calls for a reform of the price cap mechanism intensify

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5th August 2022
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Gas futures prices in Europe and US diverging on Ukraine, Freeport fire

20th June 2022
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This week's action in the gas futures market sees prices diverging in Europe and Ukraine as sanctions bite and Biden rants.

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22nd April 2022
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A 'mini crash' in the natural gas futures market reflecting colder weather in April, but what happens next as war in Ukraine continues?

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19th April 2022
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Angus Energy needs to get its gas production up and running now as quickly as possible as auditor takes dim view.

Conflict and commodities: the effects of the Ukraine/Russia conflict on financial markets

28th March 2022
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Giles Coghlan, Chief Currency Analyst at  HYCM looks at the Ukraine/Russia  conflict and its effect on the financial markets

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3rd March 2022
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How high can the oil price go this time? The answer is very high indeed. We take a look at the current status of energy markets.

Commodities and defence companies in focus for investors during Ukraine crisis

28th February 2022
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Investors focusing on agricultural and energy commodities and defensive stocks as the Ukraine crisis intensifies

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27th February 2022
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As Russia faces a larger and larger set of international sanctions and boycotts, markets are braced for volatility on the FX open Sunday.

Natural gas market could face squeeze on Ukraine tensions

25th January 2022
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Angus Energy is playing for time with potential suitors

24th January 2022
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As Angus Energy considers various bids, it looks like a lot is riding on the success of its Saltfleetby gas field.

Serinus Energy in better shape than share price indicates

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We take a closer look at Romanian oil and gas explorer and producer Serinus Energy and whether it is now looking oversold.

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30th November 2021
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Winter is coming: gas futures prices could see another surge upwards

4th November 2021
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We said it would be our commodities momentum trade of 2H of this year and natural gas - and Russia - have not disappointed traders.

September jobs report unlikely to ruin Fed’s tapering plans

8th October 2021
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Headline jobs report will probably meet or beat the expected number given the fact we have seen mostly better-than-expected NFP indicators.

Natural gas futures prices: can Vladimir Putin turn around this gas juggernaut trade?

7th October 2021
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Russia has said it will come to the rescue of European gas futures markets but there is still incredible volatility within the futures market.

Natural gas futures: our momentum trade of the year rolls on

27th September 2021
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Natural gas futures prices have come roaring back despite muted demand in September as strategic supplies look low.

Natural gas still dominates as the commodities momentum trade of 2021

2nd September 2021
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Hurricane Ida has been the latest catalyst to drive natural gas prices higher in what has become a major energy bull market.

Natural gas prices rally again in June, will hot weather drive momentum?

8th July 2021
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The natural gas market was a pretty volatile place to be in Q2 but we have seen a sustained rally in prices recently.

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The price of helium has gone up dramatically as the US government has started to restricted use of its own land for pumping.

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Colder weather and hurricanes have been helping to drive natural gas prices to 52 week highs, but are they about to run out of steam?

First half results from Hunting boost Oil & Gas sector

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Upstream Oil & Gas services company Hunting is leader of the FTSE350 this morning, its shares up a handsome 10.8%…

Centrica shares hit by gas disasters

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As Centrica shares slide again, natural gas futures look set for busy trading over Christmas.

Let’s talk about Qatar – and natural gas

13th June 2017
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Should investors be expecting a squeeze on global gas supplies after the current spat in the Gulf states?

Indian futures market faces shake up

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Proposed changes to futures trading in India should be beneficial for traders

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After a good six month run, is there still upside in this Indian resources giant?

Natural Gas

1st January 2016
Graeme Coles-Andrew

Natural gas is found it the same type of geological formation as crude oil and frequently does not come on…