Introduction
One of the main driving force of the energy industry, natural gas powers the planet in a variety of ways such as electricity generation in both industrial and residential uses to fueling almost 25 million automobiles in the world. These, aside from powering giant economies worldwide like the United States—whose 32% energy use in the last year was attributed to this fossil energy source, putting it at the top of the most important commodities in the world.
Other than these, this commodity is considered as the cleanest burning fossil fuel and the most ideal alternative to other fossil fuels. Because of the important role that it plays in our daily lives, it remains as one of the most attractive investment option in the market today.
77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
What is Natural Gas?
Natural Gas is a naturally forming mixture of hydrocarbon gas comprised mainly of methane, which also includes amounts of alkanes and lower percentage of nitrogen, carbon dioxide and hydrogen sulfide.
It is formed when layers of decomposing animal and plant matter that was exposed to the sun's heat over a million of years and are then collected in the form of chemical bonds under the surface of the Earth.
History of Natural Gas
Natural Gas was accidentally discovered in ancient China around 500 BC. During that time, it was only used to boil salt water to extract additional salt.
The first use of natural gas in an industry setting happened in 1626. By 1821, the first well in America was excavated in New York, which then led to the founding of the Fredonia Gas Light Company.
According to estimates, the supply of Natural Gas in the planet would only last for 250 years given if there's no change in the current global consumption.
Is Investing in Natural Gas a Good Idea?
The investing fundamentals surrounding Natural Gas remains consistently strong since there is a strong demand as shown by its 23% usage rate in meeting global energy needs. The number is expected to increase to 26% in 2040. These reasons alone make it an attractive investment for investors.
Despite a series of market volatility, the last several years, it retained a grab of a sizeable foothold in the market. As mentioned in a study by the International Energy Agency in 2019:
Gas demand in the coming five years is set to be driven by Asia Pacific, forecast to account for almost 60% of the total consumption increase to 2024. China will be the main driver for gas demand growth, though slower than in the recent past as economic growth slows, but still accounting for about 40% of total gas demand increase to 2024.
With an expanding market and operations expansion of gas mining, and the construction of more pipelines to deliver more natural gas worldwide, this commodity will remain a solid investment choice.
When it comes to demand, India is looking at a potential doubling of its gas transmission grid while China is expected to increase consumption by more than 60% in the coming years.
How to Invest on Natural Gas?
Here are the main financial products where you can begin investing on Natural Gas:
- Contracts for difference (CFDs)
- Exchange traded funds (ETFs)
- Futures contracts
- Buying shares of natural gas companies such as Exxon Mobil, Chevron, Royal Dutch Shell and China National Petroleum just to name a few
How to Start CFD Trading of Natural Gas?
There are several ways of engaging in CFD trading of Natural Gas (NATGAS). All you need to do is find a reliable broker or CFD trading application such as eToro to open an account and deposit your fund.
Trading NATGAS in eToro's CFD trading platform doesn't require any storage fees since you won't be trading any of these commodities physically.
Where to Buy/Invest/Trade Natural Gas?
More investors are using copy-trading app such as the eToro CFD Trading platform to not only trade and invest on the stock market, but also to invest on precious metals and in-demand commodities particularly natural gas.
How to Trade Natural Gas on eToro?
- Create an account on eToro / Log-in your account for existing users.
eToro web-based platform - Click "Discover".
Clicking "Discover" on eToro - Select "Commodities".
Selecting Commodities on eToro's platform - Choose “NATGAS”.
Looking for NATGAS on eToro's list of commodities - Select BUY or SELL.
Buying or selling NATGAS in eToro - Key in your desired amount to invest or the number of natural gas units you want to trade.
Entering amount to invest on NATGAS via eToro - Review and set the stop loss, leverage, and take profit parameters.
Reviewing stop-loss, leverage and take profit on NATGAS CFD trade - Select “Open Trade”.
Executing NATGAS buy order on eToro
The Natural Gas Market
The price of Natural Gas (NATGAS) is shown in US dollar per one million British thermal units (MMBTU) and similar to crude oil prices, this commodity is not immune to investment risks as brought upon by market price fluctuations.
eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.
Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
Past performance is not an indication of future results. Trading history presented is less than 5 complete years and may not suffice as basis for investment decision.
Copy Trading does not amount to investment advice. The value of your investments may go up or down. Your capital is at risk.
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eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro.