Natural Gas Price - XNG
Details of the natural gas market
The natural gas market in the United States is a fairly closed system, all that is produced and consumed inside. True, there are few imports from Canada, but it is all offset by exports to Mexico and through recently launched LNG terminals. Over the past couple of years, the final balance has been spinning around zero plus/minus a fraction of a percent. Thus, external influence on prices is excluded, let's see what affects them inside.
Gas has a pronounced seasonality. In summer, its consumption mainly consists of two roughly equal parts: electricity generation and the chemical industry. In winter, America begins to actively use suitable gas for heating (its share among other heating systems is about 50%) and during cold weather peaks, the share of heating in total gas consumption reaches 30-35%, which is already a significant share, which in turn significantly affects the price.
Important trading secrets
Great! we found a dependency that can be traded. Let's take a closer look at what and how the price still depends on. At first glance, of course, it depends on the weather, but the problem is that none of the existing models can predict the weather more or less accurately for long periods, although we do not need it.
As we know, the gas from the tower does not go directly to our stove or factory (although this may also be), there is a storage in which it accumulates during a low consumption period and is accordingly taken away during a high one. Starting from about October-November, the period of inventory reduction in the storage begins, and the colder it is, the more it will be taken from there.
Going back to the price, it depends a lot on how much gas will remain in storage by the end of the heating season. The market somehow calculates this value and takes it into account in the price. Every week on Thursday, the energy Agency publishes statistics on gas reserves and the market begins to play errors in its calculations, which is a good impulse that can be traded. We conclude that statistics, in General, confirm our assumption of predictability. Then we do a regression analysis and get approximate levels of price movement both up and down. We trade this information every Thursday. On average, it turns out to take about 3% of the profit (in December, at high volatility, it reached 7).
Trading: step-by-step instructions
Natural gas is one of the most popular resources in the world, so its price rate is monitored by speculators in almost every country. New deposits are constantly being found and developed, companies are opening up, and demand is increasing, which means that prices for this resource are constantly changing.
We will not dig a well in our garden for the production and further sale of gas, but there are other good ways to make money on gas.
It is also pointless to buy gas cylinders, at least if you do it on a small scale. This is about trading gas contracts on the financial market, what you can do at home or use a mobile device to make deals wherever there is an Internet connection.
The good news is that you don't even need to understand gas-related processes to start with, but you will have to learn more over time. The broker, which offers its clients trading not only currencies, but also energy resources, has a free service for clients-trading signals, and also, another free service - individual consultation with the company's analyst.
On the site, you can always find statistics of signals for the past year by currency, but now the main analyst of the broker sends SMS recommendations also for energy resources, among which, of course, gas. It is profitable for the company to increase its turnover and cooperate with clients for a long time to receive a Commission on completed transactions (spread).
The client is also profitable, since he may not yet be able to independently analyze the market and make money on gas, currencies, oil, and so on, but will already be able to make a profit by following the recommendations of the chief analyst. Of course, it will be great if over time a person learns to earn on their own on gas and other resources, but success comes with experience.
Gas is very volatile, which means that its rate changes quite often, thus creating opportunities for making money. A huge plus of trading on Forex with various assets is that you can earn money not only on the growth of the price but also on its decline (unlike stocks, where earnings only on the growth of the price rate).
The whole process will look something like this:
- registered a trading account;
- downloaded a free trading terminal from the broker's website;
- installed it on your PC (1-2 minutes), launched, logged in (data-login and password are issued during registration);
- if something is not clear - a personal Manager is at your service, who will call you back;
- we ask the Manager to connect the SMS signals of their analyst;
- we are waiting for an SMS message with a recommendation and in our terminal, we conclude the transaction that was in the message.
- If it is not possible to trade gas while sitting at the computer during the day, then you can work out all the signals, for example, using a smartphone or tablet. As a rule, several dozen recommendations for different assets are received per month.
What factors influence the rate
The economy of both exporting and importing countries depends on how the price of natural gas changes on the exchange. In other words, the dynamics of its quotations affect almost the entire world economy, which is why there are quite a large number of factors that need to be taken into account when forecasting the price of natural gas.
Some of them are directly related to the extraction process, while the other group of impacts is more likely to be economic and diplomatic.
Of course, when analyzing quotes in the short term, you should pay attention to the signals of technical analysis indicators, but when concluding deals with a longer duration, you need to analyze the entire commodity market, as well as the economic and political state of many countries
Exporters and importers
Therefore, most of the world's countries are divided into gas producers (they are often exporters) and importers.
Production of this hydrocarbon raw material is carried out in many countries, including the United States, Russia, Iran, Qatar, Indonesia, Canada, China, Norway, Saudi Arabia, Algeria, and Turkmenistan – these countries are the largest in terms of produced natural gas according to OPEC.
In addition to them, production is carried out in more than 50 countries, but the volume of their production is much lower.
Importance of international policy
The relationship between gas importers and major exporters is one of the key factors that influence the cost of natural gas. In the event of serious international conflicts, countries that produce gas may well reduce the volume of its exports or refuse to trade with any partners, which may even lead to an energy crisis. In such circumstances, there may be a rise in gas prices and a very significant one.