Overview of Natural Gas Trading
Natural gas trading involves buying and selling natural gas in financial markets. Trades exchange contracts representing the right to specify quantities at set prices and dates. Trading occurs primarily on exchanges with standardized futures contracts.
Positions in Natural Gas Trading
Traders take long or short positions. Longs expect rising prices; shorts expect decreases. Day traders close positions within a day to profit on price changes.
The Market for Natural Gas Futures
The Chicago Mercantile Exchange offers natural gas futures. The most popular NG contract equals 10,000 million British thermal units. The exchange also provides options on futures.
Impact of Gas Price Cap in Europe
EU ministers capped gas prices to lower energy bills pushed higher by Russia cutting most European gas imports. Some fear reduced exchange liquidity and disincentives for liquefied natural gas exports to Europe.
Processing of Natural Gas
Raw natural gas becomes usable methane after processing and purifying. For transport, gas liquefies into liquefied natural gas.
Recent Trends in Natural Gas Trading
Natural gas futures trade on the New York Mercantile Exchange. Prices surged almost 500% in 2020 – 2022 before dropping back in a sell-off.
Investment Outlook for Natural Gas
Is it good to invest in natural gas right now?