Natural Gas has gone from being an unwanted byproduct of Oil wells to an in-demand fuel source. Consumers hail Natural Gas’ lower price point and cleaner emissions when compared to traditional Oil. CFD Traders use the commodity’s seasonal volatility and increased global demand to help them try to predict the movement of Natural Gas futures.
This fossil fuel is extracted out of the ground, making it no surprise that established Oil companies are the production leaders in the Natural Gas industry. This is due to their accessibility to the technology and equipment needed for efficient extraction of these in-demand resources which are trapped deep below the earth’s surface.
The Natural Gas industry is made of a large ecosystem that prospects, extracts, refines, and delivers fuel to end users and power production sites.
The largest companies in this ecosystem are producers. While they have the largest upfront investment, such as prospecting, drilling, and extraction, anything they pump out of their wells becomes their asset.
This is seen through the value of the world’s top producers, such as Russia’s Gazprom, which accounts for 12% of global output. This is followed by Exxon, China National Petroleum (CNPC), Royal Dutch Shell, BP, Chevron, and Total.
You can trade CFDs on some of the largest Natural Gas Companies on the Plus500 platform, including:
As with any industry, the stock price of these producers relies on their ability to source new technologies and deliver them to their market at a profitable price.
For example, if you believe that Exxon’s share price is going to rise, you can open a Buy position on Exxon shares CFDs to go long and recognize profits from the price difference between your initial buy price and the higher closing price. However, if the price were to fall you would incur a loss.
On the other hand, if you believe that the price of Exxon’s shares are going to fall due to global, economic, or any other factors, you can open a Sell position on Exxon shares CFDs. This will allow you to recognize profit from the difference between the opening price and a lower closing price. However, if the price rises after you open a Sell position, you will incur a loss.
Profit and growth for Natural Gas and Oil companies are at the mercy of the market. Since their values are directly tied in large part to the value of the commodities they hold, low Oil and Natural Gas prices devalue corporations and discourages production.
This combination of fluctuating asset values and traded shares introduces potential price volatility. CFD traders can open positions on a stock’s movement, regardless if the value of the share rises or falls.
With the Natural Gas industry shifting its output in 2006, tradable futures, options, and shares have proven to be volatile and at times unpredictable, presenting unique opportunities for prepared traders.1A screen capture of the Plus500 platform, as of September 2020. Illustrative prices.