At present, natural gas ranks as the second most prevalent energy source for power generation on a global scale, accounting for 22% of all power produced in 2017. In the past decade or so, natural gas’s increased utilization in developing nations such as China and Indonesia has sustained its popularity.
Natural gas is utilized to power industrial furnaces, heat buildings, boil water, fuel vehicles, and produce food, in addition to operating air conditioning units. Residential appliances such as gas ranges and radiators operate by converting the thermal energy provided by natural gas into usable heat.
Henry Hub Natural Gas (NG) futures, which are traded via the Chicago Mercantile Exchange Group (CME Group), serve as the industry standard. The Henry Hub, a natural gas conduit located in Louisiana, is the designated delivery site for futures contracts via natural gas intraday trading strategy, hence the nomenclature. Natural gas futures are the third largest physical commodity futures contract globally in terms of volume.
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The leading global generators of natural gas
As opposed to oil, which is typically encased in enormous subsurface reservoirs, natural gas is frequently entrapped in sediment and boulders. Typically, extraction companies use hydraulic fracturing, or fracking, to extract natural gas. This involves forcing water, chemicals, and sediment deep into the earth in order to force the gas out.
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What factors influence natural gas prices?
Similar to the majority of commodities, natural gas prices are determined by supply and demand. Weather, the development of alternative fuels, accumulated reserves, and global demand are some of the most significant determinants of natural gas supply and demand.
In essence, if there is greater demand for natural gas (‘demand’) than supply (‘supply’), the price of the fuel will increase due to its wider desirability. If demand is less than supply, however, the price will decrease.
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Natural gas reserves that are stored
Numerous nations possess natural gas reserves that can be utilized in the event of an excess supply. Governments anticipate that by storing natural gas, some of the issues associated with price increases during periods of diminished production can be mitigated.
Maintaining reserves of natural gas enables nations to reduce their reliance on imports during periods of supply scarcity, thereby temporarily suppressing demand. Nonetheless, should a nation’s natural gas reserves deplete or become scarce, it will be obligated to procure additional supplies; this would result in elevated prices to compensate for the reduced accessibility of natural gas.
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Worldwide demand
The worldwide need for natural gas has increased substantially over the last decade. It is anticipated that the demand for natural gas will increase by approximately 1.6% annually over the next five years, with emerging Asian markets accounting for the majority of this increase.4
Despite this, the United States continues to be the leading global consumer of natural gas, with Russia, China, Iran, and Indonesia following suit. Uncertain is the price impact that a rising global demand for natural gas will engender. If increased production from the United States and Qatar is sufficient to meet the expanding demand, prices might not be significantly impacted.
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Methods of trading natural gas
Subsequent contracts
Options available
Contracts based on variance
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Futures agreements
Traders typically enter into natural gas positions through futures contracts, such as the Henry Hub natural gas futures contract offered on the CME. Traders with the information from sebi registered banknifty telegram channel enter into a futures agreement to receive a specified quantity of natural gas at a predetermined future date in exchange for a predetermined price. Nonetheless, this may ultimately necessitate the merchant to accept delivery of the asset.
Using a CFD, you can speculate on the price of a futures contract through IG without acquiring the fundamental asset.
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Options
In addition to futures, options can be utilized by speculators to speculate on the price of natural gas. Puts and calls are the two varieties of options that grant investors the prerogative, but not the duty, to purchase or sell an underlying asset prior to a specified expiration date.
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CFDs are contracts for differences
CFDs permit speculation on natural gas price fluctuations without requiring tangible ownership of the underlying commodity. By engaging in a CFD, you consent to exchange the price differential that exists between the opening and closing of the contract.
By allowing you to trade short or long, CFDs can function as a viable hedge for your other active positions, allowing you to profit from markets that are declining in addition to increasing.
Concerning the Camarilla Pivot Point Intraday Trading Method:
The Camarilla pivot point (mean reversion) remains a widely utilized intraday trading strategy among traders due to its remarkable accuracy and consistent performance of one hundred percent.
Nick Scott, a brilliant bond trader in the late 1980s, developed Camarilla pivot point theory as an enhanced iteration of the conventional classical pivot point approach. It takes a lot of skill to invest in commodities and stocks with a high beta. Basically, the math is based on the idea that prices tend to return to their average levels.
Energy-related goods, like oil and natural gas, have generally had very volatile prices because there are so many things that can change the amounts of supply and demand for them. When trading in the natural gas market, the best trading tactics are those that focus on short-term wins, like day trading. This is because the price of a long-term stake can change against you overnight.
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A way to trade every day
Because the price of natural gas changes all the time, day trading may look like a good way to speculate. Day traders look at the markets in a planned way with the goal of making small gains by making several trades during a single trading session.
People who have a lot of free time and can keep an eye on important news stories and events that might have an effect on the price of natural gas are the best options for day trading.
Conclusion
Different people can use different trading techniques, including using sebi registered analyst telegram channel on the natural gas market, depending on their trade goals and how much risk they are willing to take. Seasonal trading, trend watching, mean reversion, and spread trading are all common ways to trade. It is important to do a lot of study on these tactics and really understand them before putting them into your trade system.
As you start your research, it’s important to be aware of how changing the natural gas selling sector is and be ready to adapt to new market conditions and possibilities.
