As the U.S. economy finally picks up its pace, many investors are returning to the corner of the market that was one of the primary sources of the 2008 financial crisis: housing. Across the board, housing stats have been on the rise in recent years, including home prices, housing starts, building permits and construction. As such, interest in the raw materials involved in housing have also benefited from the uptrend, particularly lumber [for more commodity news and analysis subscribe to our free newsletter].
Natural gas is one of the most popular commodities in the world and it often ranks among the CME Group’s most traded futures contracts; however, the commodity had been stuck in a rut since the 2008 recession before it finally saw some relief as 2013 opened. From natural gas’s peak to the beginning of the year, the fossil fuel had declined by more than 92%, as a number of macroeconomic factors weighed on the commodity. Just as it finally picked up steam in 2013, NG sputtered into May, dipping more than 9% through the first week of the month [for more natural gas news and analysis subscribe to our free newsletter].
One of the most attractive features of the commodity space is its cyclical returns. While it may make it difficult for long term investors, traders who know the patterns of certain hard assets can often turn a nice profit simply based on the natural price movements of different commodities. Crude oil is no exception to such patterns, as savvy investors have been profiting from the fossil fuel’s trends for years. Though crude has been exhibiting weakness with questions about its long-term future, its short-term seasonal trend may be a ripe opportunity for traders everywhere [for more crude oil news and analysis subscribe to our free newsletter].
It’s been an interesting time for investors in the natural gas space. As hydraulic fracturing and horizontal drilling have become the extraction method of choice for E&P firms, production of the fuel has skyrocketed and led to a surplus of supply and high storage inventories. The huge surpluses have combined with slack demand for the fuel, causing prices to crater. At one point they were below $2 per MMBtu [for more oil news and analysis subscribe to our free newsletter].
While many commodity investors and traders primarily focus their attention on larger natural resources like gold or oil, there are plenty of other opportunities in the space; one of them lies within the soft commodity of cotton [for more commodity news and analysis subscribe to our free newsletter].
High daily volumes coupled with erratic and sometimes unpredictable movements have given natural gas a big name in the commodity world, along with a reputation as a risky investment. With NG jumping more than 20% year-to-date and still climbing, many analysts are looking for a spark behind these gains, and they’re wondering how long the trend will last [for more natural gas news and analysis subscribe to our free newsletter].