Differences between Investing vs Trading
Differences between Investing vs Trading
The properties of natural gas have been known about for centuries, but it wasn’t used commercially until the late 18th century when it was first introduced to the UK as a way of lighting streets and homes across the country. By the early 19th century, the US had started lighting the streets of its main cities with natural gas, thanks to the production from its first gas wells. This compared to the British approach of obtaining natural gas from coal.
The world began to use more natural gas once the possibilities for cooking and heating with it became known. The arrival of giant pipelines allowed gas companies to transport it long distances to consumers very easily. Natural gas is now classed as one of the most important and widely-used energy sources on the planet. It’s used all over the world and is regarded as a safe, clean energy source.
Natgas and other commodities
Commodities are the basic building blocks of the economy and can be divided into two broad categories: energy commodities and metals commodities. Gold, oil wti,oil brent, silver, and platinum are examples of commodities that fall into the energy category, while gold, silver, and platinum are examples of commodities that fall into the metals category. Although commodities in different categories can sometimes be related to one another, they don't always move in the same direction. For example, when gold prices increase, it's not necessarily an indicator that crude oil prices will also increase.
However, there is often a correlation between commodities in the same category. For example, when crude oil prices increase, it's often an indicator that natural gas prices will also increase. They are an important part of the economy and can be a helpful tool for understanding how different sectors are performing.
As with all natural commodities, a wide range of factors affects the natural gas price. These issues include the fluctuating levels of supply and demand in the market, together with social, economic and political issues that could affect its supply and distribution.
As more people across the world look for gas for a greater variety of uses, the price has largely increased in recent years. 2005 is a good example of a natural gas price spike, as a combination of natural disasters, surging demand and a restructuring of the US gas network led to a record high value of over $21 on the Henry Hub spot price.
2022 has also seen the natural gas price pushed up toward record levels, as supply lines have been under threat for a variety of reasons. Colder than average winters in the biggest markets are another factor that can increase demand and send prices soaring at relatively short notice.
As a keenly-watched commodity, natural gas is traded in a number of ways. CFDs on natural gas futures provide a way of benefiting directly from any changes in the natural gas price. They can be used by traders looking for a greater level of leverage to increase their possible gains.
Another option is to invest in shares of gas companies, which means that any changes to the natural gas price should be reflected in the investor’s shares. However, this may result in a low level of diversity.
Funds that cover a range of gas stocks provide a more diversified approach. Since the same companies often produce or supply natural gas and oil, some of these funds are based on the value of both of these important commodities.
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* The spreads provided are a reflection of the time-weighted average. Though Skilling attempts to provide competitive spreads during all trading hours, clients should note that these may vary and are susceptible to underlying market conditions. The above is provided for indicative purposes only. Clients are advised to check important news announcements on our Economic Calendar, which may result in the widening of spreads, amongst other instances.
The above spreads are applicable under normal trading conditions. Skilling has the right to amend the above spreads according to market conditions as per the 'Terms and Conditions'.
Why Trade [[data.name]]
Make the most of price fluctuations - no matter what direction the price swings and without the restrictions that come with owning the underlying asset.