What are futures on natural gas?

The fourth largest energy source in the United States and a rich source used throughout North America plays natural gas with an integral role in maintaining power in industry and domestic consumers. Based on the New York Business Stock Exchange (NYMEX), they are traded with futures on natural gas, which provide consumers and energy manufacturers with a financial vehicle to provide their price risk on this volatile market. Likewise, these traded contracts also serve as investment tools for speculators who trade with futures contracts in the hope that they benefit from the price differences that occur when the market is rising and decreases with changes in supply and demand.

The relatively recent development, the futures of natural gas first introduced Nymex in 1990. The impulse to create this new market instrument was the US natural gas Act of 1978, which deregulated natural gas and opened it to the competition of the free market. Since its introduction ten years ago, futures on natural gas have become the fastest rosFutures by volume and open interest in Nymex history.

Although other countries around the world include natural gas in their energy schemes, natural gas futures are slowly developing outside the US, mainly because of the highly regulated nature of natural gas industry abroad. Russia, another major natural gas producer around the world, firmly regulates its natural gas market, keeps prices artificially low for home consumption and increases it higher for export. Futures are unnecessary in highly regulated markets because volatility and prices are minimal.

The

type of commodity agreement, natural gas futures include the purchase or sale of a standardized natural gas at a specific price for delivery on the specified date in the future. Futures contract for natural gas trades in units of 10,000 million British thermal units (BTU). Btu is the amount of natural gas needed toheating one pound of water by one degree. In one cubic foot (0.03 cubic meters) of natural gas is approximately 1,027 BTU. Treaty prices for futures for natural gas are based on the current delivery price in Henry Hub in Erath in Louisiana.

Medium processing point, where 16 natural gas pipes meet, draws gas from a number of main areas producing natural gas, Henry Hub Pipeline System Services Texas, Gulf Coast, along with MID West and Canada. Due to the huge volume of natural gas passing through this place, the price set in Henry mushrooms determines the price for the entire North American gas market.

As one of the main sources of energy for heating houses and commercial structures is the demand for natural gas seasonal, the peak decreases during winter and during the summer months. Energy producers, public services services Ainvesters, all evaluate their exhibition on the natural gas market in relation to these seasonal trends in demand. Heavy weather conditions aso are hurricanes, they can also play confusion with natural gas prices, damaging processing and influencing fuel transport.

Government energy policy also affects the demand for this source, with the legal regulations supporting the sources of green energy that will have a positive price impact on the market because natural gas is considered a pure fuel type. Another main factor influencing the price of futures for natural gas is oil. Since oil and natural gas compete with each other as energy sources and are used in a very similar way, the fluctuations of oil commodities can also exert price pressure on the natural gas market.