A look at Natural Gas Commodities

What is Natural Gas?

Natural gas is a mix of hydrocarbon gasses, mostly methane. Methane is the primary component of natural gas. It is a non-renewable resource that can be found in the ground. In fact, it is the second most abundant fossil fuel in the world after coal. Natural gas is used to power industries and homes. It is also a feedstock that is used to make chemicals and fertilizers. Its main use is to generate electricity.

Commodities in Natural Gas

There are three key commodities in natural gas that are traded frequently. They are natural gas liquids (NGLs), natural gas, and natural gas pipeline stocks. NGLs are a collection of gases that are extracted during the process of creating natural gas. They include ethane, propane, butane, pentane, and hexane. Natural gas itself is typically priced based on the Henry Hub spot price index. This is the benchmark price for natural gas in the United States. Natural gas pipeline stocks are also important commodities in the natural gas market. Since most of the gas in the United States is transported through pipelines, these stocks are important for the supply chain.

NGAS Options

Natural Gas options are contracts that give you the right, but not the obligation, to buy or sell natural gas at a specific price on a specific date. There are three types of natural gas options: Commodities that are used to trade options on the natural gas market include natural gas, NGLs, natural gas pipeline stocks, and futures contracts. Natural gas options are traded on the New York Mercantile Exchange (NYMEX). This is where you can trade options on natural gas. These include futures and options.

NGAS Futures

Natural gas futures are a type of futures contract where the buyer agrees to buy natural gas at a certain price on a certain date. They are standardized contracts that trade on futures exchanges. Natural gas futures are priced based on Henry Hub spot prices. Contracts are standardized to 10,000 cubic feet of gas. Natural gas futures are traded on the New York Mercantile Exchange (NYMEX).

NGAS ETFs

Exchange-traded funds (ETFs) can be used to gain exposure to natural gas. They are investment funds that track the price of an underlying commodity. Natural gas ETFs are funds that are invested in natural gas wells, production, and transportation. ETFs are diversified funds that provide exposure to a specific commodity. There are two ETFs that have exposure to natural gas: - Vanguard Natural Gas ETF (VGAS) - This ETF tracks the energy sector. It has exposure to natural gas, crude oil, coal, and alternative energy sources. The fund yields 3.2%. The expense ratio is 0.11%. - iShares Dow Jones Select ETF Natural Gas (IAG) - This fund tracks the S&P GSCI Natural Gas Index. It has exposure to natural gas, crude oil, and other energy sources. The fund yields 3.3%. The expense ratio is 0.12%.

USD Natural Gas Exposure via ETNs

Exchange-traded notes (ETNs) provide investors with exposure to the underlying commodity. In this case, the underlying commodity is natural gas. These funds have a quantified and predetermined amount of natural gas that they owe to investors. When investing in ETNs, you are being paid the difference between the price of natural gas when you bought the ETN and when you sold it. There are three ETNs that have exposure to natural gas: - Credit Suisse Natural Gas ETN (UGAZ) - This ETN has exposure to natural gas futures contracts. The fund yields 0.81%. The expense ratio is 0.24%. - UBS Natural Gas ETN (UGAZ) - This ETN has exposure to natural gas futures contracts. The fund yields 0.81%. The expense ratio is 0.25%. - Deutsche Bank Liquid Natural Gas Index ETN (UGAZ) - This ETN has exposure to the spot price of natural gas. The fund yields 0.25%. The expense ratio is 0.25%.

Concluding remarks

Natural gas is a key source of energy demand in the world. Natural gas is a non-renewable resource that will deplete over time. As its demand continues to rise in the global market, natural gas has also become an important commodity for trading. In fact, many investors see this as one of the best ways to profit from investing in natural gas.