Every week we provide insights into popular assets and hot questions, so you can easily learn more about the investment market in bite-sized pieces.
In this Markets in Focus we take a closer look at Natural Gas.
What is Natural Gas?
Natural gas is a crucial energy source, currently supplying about 22% of the world's total energy needs. It is widely used for both commercial and industrial purposes, and international investors often choose it to diversify their portfolios by investing in a reliable asset class.
Historically, natural gas prices have seen significant fluctuations. In January 1992, the commodity reached a record low of $1.04, while in December 2005, it hit a record high of $15.78.
Today, natural gas is considered one of the cleanest and safest fossil fuels. Compared to coal or petroleum, it is a far more environmentally-friendly option, making it a preferred energy source in an age where environmental concerns are paramount. As a result, investments in natural gas have grown significantly in recent years.This versatile fuel is used globally for various applications, including heating, cooking, and electricity generation. Every year, major countries extract billions of cubic meters of natural gas to meet global demand.
Supply and Demand: A Unique Challenge for Natural Gas
One aspect that makes natural gas unique is the frequent imbalance between supply and demand. This "seasonal mismatch" means that demand often exceeds supply during the colder winter months, while in the summer, demand tends to be lower, leading to a surplus.
Factors Influencing Natural Gas Prices
The price of natural gas is highly sensitive to changes in supply and demand. Even minor shifts can cause significant price movements. Key factors that influence natural gas prices include the production process, weather conditions, economic growth, storage levels, and the availability of alternative energy sources like hydroelectric, wind, and solar power.
Trading Natural Gas CFDs with Change
One advantage of trading Contracts for Difference (CFDs) is the ability to profit from both rising and falling prices. If you anticipate a rise in Natural Gas prices, you can buy a CFD. Conversely, if you expect the price to fall, you can sell a CFD.
Through the Change App, you can trade Natural Gas with up to 10x leverage, maximizing your potential gains (or losses). Trading is available from Sunday to Friday.
We wish you a successful trading week on the Change App.
Until next week!
