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Best Natural Gas Trading Brokers

Written by Miro Nikolov
Miro Nikolov is the co-founder of TradingPedia.com and BestBrokers.com. His mission is to help people make profitable investments by giving them access to educational resources and analytics tools.
, | Updated: November 12, 2024

Our team of expert traders tested several regulated and trustworthy Natural gas trading brokers and compiled a toplist with the best among them. Every platform allowing CFD’s on Natural gas received a quality score based on several factors, including Trustpilot rating, regulation, fees and commissions, available trading platforms, customer service and more.

  1. Fusion Markets
    Rating: 4.9
    74-89% of retail CFD accounts lose money
  2. Axi
    Rating: 4.8
    The vast majority of retail client accounts lose money
  3. FP Markets
    Rating: 4.7
    73.85% of retail investor accounts lose money
  4. Pepperstone
    Rating: 4.6
    75.5% of retail investor accounts lose money
  5. Global Prime
    Rating: 4.5
    74-89% of retail CFD accounts lose money
  6. XM Group
    Rating: 2.9
    72.82% of retail investor accounts lose money

Natural Gas Trading Brokers

choosing a brokerIt goes without saying that when traders want to get exposure to the natural gas market, the broker they will choose plays a crucial role. Picking a professional, trustworthy, and reputable broker might take a while, considering how huge the range of options is. There are a number of factors to be reckoned with, and traders should closely examine the broker’s track record, the available instruments, the jurisdictions the company operates in, whether fees are charged when depositing or withdrawing funds, whether the customer support is available at all times, and whether assistance is offered in their language, among others.

Formed deep beneath the earth’s surface, natural gas is a naturally occurring hydrocarbon used in many industries. It is one of the most attractive fuels because it is a naturally abundant fossil fuel that is also the least expensive and the cleanest of all fuels. It is a staple resource that is used in heating, cooking, and electricity production, to name a few, and not to mention that the number of vehicles that are powered by natural gas is already well above 20 million.

Natural gas also needs to be drilled from the ground as it exists alongside oil reserves, and these days, owing to the technological advancements in extraction methods, natural gas production has seen a massive increase. As with the other energy commodities, large price swings are also observed in the cost of natural gas. The rises and falls in the costs are mainly dictated by supply and demand, as well as the expectations of traders. Natural gas is not as rarely found as some of the other energy commodities, but creating the infrastructure that is needed in order to exploit it is rather costly.

Undoubtedly, oil is the most popular and preferred energy commodities traders tend to hone in on. Still, it is far from being the only alternative they have when they are looking to keep their portfolios diversified.

As it turns out, natural gas is not only one of the most widely used energy sources in the world, but it is also the second most traded energy commodity after oil. As is the case with the other energy commodities, trading natural gas is possible in a few different ways, and before they set about it, traders should learn the nuts and bolts of each way in which they can attack the market.

How Natural Gas Trading Works for Traders and Brokers

Natural Gas TradingNatural gas is an in-demand commodity that is preferred because of the slew of trading opportunities it presents. The hyper development the industry has seen since 2006 has brought in numerous opportunities for traders to decide between when they want to get exposure to the market as they can go for futures contracts, focus on the share prices of transporting companies, and natural gas producing companies, among others.

When global natural gas production is concerned, figures show that back in 2021, the USA was the producer that led the way. Russia was the second biggest contributor to natural gas production. Yet, Russia is the country that has the largest proven natural gas reserves and is also the world’s leading exporting company.

  1. Futures – futures contracts are one of the most preferred ways to take a position on natural gas and for a reason, and these are agreements to sell or purchase something at a future date. Traders should keep in mind that when futures exchanges are concerned, the natural gas price fluctuates in $0.001 increments. Thus, based on how many increments or ticks, as they are also known, the price has moved away from the entry time, traders’ loss or profit will be determined.
  2. Options – options are financial instruments that can be used while trading stocks, currencies, bonds, and commodities, and they allow traders to leverage their bets on natural gas or any other underlying asset. Just like all other types of options, with natural gas options, a put represents short positions, while calls represent long positions. Yet, what traders should consider is that there are a number of factors that cause market volatility, thus making it more challenging to use options.
  3. Spots – natural gas spots are settled right away and do not rely on futures contracts. These are trades on the actual natural gas price and are far more volatile when compared to futures, which is one of the main causes for the greater difficulties in deliveries that are reflected in spot prices.
  4. ETFs – another way to trade natural gas is through exchange-traded funds. In this way, traders will evade paying any storage costs that incur when holding physical commodities and avoid the complexities of natural gas futures contracts.
  5. CFDs – these are contracts between brokers and traders that mirror the price movement of natural gas. CFDs allow traders to speculate on the price of the underlying asset without owning the physical commodity, and by going for them, traders do their best to benefit from the difference between the price when opening and closing the trade. The most obvious reason why traders prefer natural gas CFDs is that they give them the opportunity to get exposure to the market, no matter what their outlook on its movement is. In other words, traders can attempt to benefit from the upward and downward price movements.

    Another thing traders should bear in mind about natural gas CFDs is that because of the offered leverage, they can trade with amounts that are greater than the ones they have deposited. Still, what traders should remember is that losing more than the deposited amount is also not excluded.

Another vital thing traders should bear in mind is that in exchange for executing sell or buy orders, brokers will charge an extra fee that is also known as commission. Depending on their broker of choice, the actions traders will be allowed to execute when using their chosen platform might not always be fee-free, and extra costs might incur when funding their accounts, withdrawing their funds, or when they have not placed trades for a while.

Why Natural Gas Prices Move

Why Natural Gas Prices MoveNatural gas is a growing favorite among traders mainly because of the inherent seasonal price fluctuations that are somewhat easy to predict. As with the other energy commodities, supply and demand are the key factors that drive prices up or down. On their end, supply and demand can be affected by multiple factors, including weather, alternative fuels, stored reserves, extraction, and treatment, among others.

Related Topics

FAQ

1. What affects the natural gas price?

The price of natural gas is a function of supply and demand, and there are multiple factors that can affect the supply and demand sides, including net imports, natural gas production, storage levels, economic conditions, weather, and petroleum prices, among others. Prices increase when there are decreases in supply and fall when there is an increase in supply.

2. What strategies I can use when trading natural gas?

Because of the slew of factors that have an effect on the supply and demand levels of commodities that are sources of energy, natural gas included, their prices have been historically volatile. In view of this, it is best to make use of strategies that focus on small-time gains, which is exactly the case with day trading. Swing trading is a short-to-medium-term style of trading that might also do the trick when getting exposure to the market.

3. What is natural gas trading all about?

Getting exposure to the market can be done via futures, stocks, ETFs, options, and CFDs. CFDs are undoubtedly the best-known financial products among traders as, while using them, traders can get a leveraged position on the market while using just a small part of their accounts. Each of these options has its pros and cons, and no matter which one of them traders will pick, they should make sure that they are using a strict risk management strategy.

4. What time does natural gas trading start?

The natural gas sold out of the Henry Hub in Louisiana, the USA is the one that determines the natural gas benchmarks. Then, the energy commodity is traded on the Chicago Mercantile Exchange. The natural gas trading hours are set by the Chicago Mercantile Exchange and start on Sunday at 23:00 and end on Friday at 22:00 UTC time. Traders should keep in mind that the commodity is not traded around the clock as there is a one-hour break that begins at 5:00 PM. One more thing to consider is that the trading hours shift from March and November because the US and the UK switch from and to daylight saving time.

5. Is it possible to trade natural gas using technical analysis?

This is a tool that helps traders prepare for future price movements of various financial instruments, natural gas included. To a large degree, this tool relies on chart patterns and the idea that history repeats itself, which is to say that traders will be able to get an idea about the way prices might change in the future after examining price charts. Thus, the patterns can be reversal and continuation based on whether they forecast the reversal or the continuation of the underlying trend.