Natural gas took a major blow in trading today as the fossil fuel lobbed off more than 3.5%. The unexpected drop came as new sanctions from the EU officially banned natural gas imports from Iran. The move comes as European nations are “trying to increase pressure on Iran to cooperate in talks regarding its nuclear program” writes Associated Press. This comes in a long line of efforts by numerous nations to force Iran into cooperation regarding its nuclear program, an issue that the country seems to have no intentions of addressing [for more natural gas news and analysis subscribe to our free newsletter].
Few commodities have been in the news as much as natural gas has in 2012. After an abysmal multi-year run, NG seemed to have no momentum behind it and most investors had given up hope. But earlier in this year saw some much needed relief for the fossil fuel as temperatures across the nation were hotter than normal, spiking demand for NG. Ever since, natural gas and its related investment securities have been on a tear, with the commodity itself tacking on 70% in the last three months alone [for more natural gas news subscribe to our free newsletter].
Trading natural gas has long been the dominant way of obtaining exposure to this fossil fuel. While it is possible to establish positions using stocks and ETFs, the most direct and often most liquid options come from futures contracts (or futures-based products). High daily volumes coupled with erratic and sometimes unpredictable movements have given natural gas a big name in the commodity world. While some have gotten burned by NG’s massive slide in recent years, others have been able to profit through puts and other trading strategies. Below, we outline strategies for trading natural gas, the ultra-popular United States Natural Gas Fund (UNG), and more [for more natural gas news subscribe to our free newsletter].
This article originally appeared on ETFdb.com. Commodity ETPs can be extremely powerful tools for tapping into an asset class capable of providing both return enhancement and diversification benefits. With dozens of products available–there are more than 120 U.S.-listed commodity ETFs according to the ETF screener–picking the right fund for your investment objectives and risk tolerances can be challenging. Beyond the type of commodity included, there can be several attributes of commodity ETPs that shape the risk/return profile; below, we look at five factors to consider when trying to narrow down the universe and find the right commodity ETF (or ETN):
Natural gas is a gas that consists primarily of methane and is widely used as an energy source around the world. The natural resource is important for the creation of fertilizers, and is now used to power a wide variety of applications including automobiles. Supplies of natural gas are concentrated in a few regions of the world, and the fuel has historically been the source of political disputes in Eastern Europe and the Middle East as well as in the U.S. The place of natural gas in the domestic energy equation has been widely discussed in recent years, with many advocating for increased adoption as an alternative to crude oil products [see also The Guide To The Biggest Companies In Every Major Commodity Sector].