Take A Closer Look at Natural Gas
Nadex lets you trade markets like crude oil with less risk per contract than with futures. You can also explore, for less than $100 a contract, markets you might otherwise overlook. Natural gas is a growing part of the energy markets and worth a closer look.
By Vikram Rangala
Wednesday, April 5, 2017 - 00:00
On Tuesday, the Persian Gulf state of Qatar announced that it was ending its 12-year moratorium on drilling and development of its part of the world's biggest natural gas field. The field is shared by Qatar and its neighbor across the gulf, Iran, which has control of one third. The Qataris call it the North Field and the Iranians call it South Pars.
For much of the last 12 years, Iran has been under sanctions which severely restricted its ability to sell oil into the open market or to solicit contracts from multinational oil companies to develop its oil and gas reserves. The result for its oil markets was that its onshore holding tanks filled up and it even used a fleet of oil tankers moored off its coast to hold its excess.
When sanctions were lifted after Iran's deal with the US and other nations to limit its nuclear energy program, Iran went forward with development of its natural gas reserves as well. The French company Total SA, which has development deals with both Iran and Qatar, helped it grow until Iran's output overtook Qatar's.
Understandably, Qatar is now ready to take back its lead. Both countries are focused on the border between their two areas of control, trying to capture as much of the underground (and underwater) resources as possible. In recent years, natural gas overtook coal as a power source in the US, second only to petroleum. Worldwide, liquified natural gas (LNG) is the fastest growing energy source, with renewables on pace to catch up in a decade or more. That means that natural gas, which emits less carbon dioxide when burned, with fewer by-products, can be a bridge between dirtier fossil fuels and clean sources of the future.
Natural gas futures are more commonly traded on futures exchanges as well as on Nadex. While crude oil still has 4-6 times the daily volume on Nadex, it may be worth a look for traders who follow the energy markets or simply want to try trading it. The natural gas market is independent of other energy markets, with its own personality on both the long-term and intraday time frames. It frequently exhibits strong, sustained trends for weeks at a time.
This is not a recommendation for or against trading natural gas, just a reminder that it's available to you. You can trade it on Nadex with the exact same risk and opportunity as any other market. Which is kind of the point: it's no more risky to trade a somewhat exotic market like natural gas than it is to trade the euro-US dollar or the Dow.
So next time you see news about the North Field natural gas reserves in the Persian Gulf, or about the emirate of Qatar hoping to overtake Russia, Australia, and the US as the world's leading supplier of natural gas by the time it hosts the World Cup in 2022, you don't have to treat it as news about a faraway kingdom and a market only the big players can think of trading. You can open the Nadex app on your phone or PC and take a position in natural gas anytime, for less than $100 of risk per contract.
This information has been prepared by Nadex, a trading name of North American Derivatives Exchange, Inc., prepared by independent third parties contracted by Nadex or reproduced form third party news agencies. In addition to the disclaimer below, the material on this page does not contain an offer of, or solicitation for, a transaction in any financial instrument. Nadex accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.