Introduction
Natural gas is a cocktail of gases which are rich in hydrocarbons. Natural gas is also known as “henry hub” after the gas pipeline with the same name which runs across Erath in Louisiana. This pipeline has a great impact on the natural gas future price. These futures are traded on the largest futures exchange in the world, the New York Mercantile Exchange. Natural gas prices also depend hugely on the price of oil. The natural gas commodity price is INR164.80 per 1250 Million British Thermal Unit (mmBtu). The natural gas prices live along with last week’s trend are all available online.
Uses
Natural gas is one of the primary sources of energy currently. The odourless and colourless fossil fuel is used extensively in industries and households. Natural gas is a blend of hydrocarbons, nitrogen, carbon dioxide, hydrogen sulphide and noble gases in some cases. Natural gas is widely used in houses and commercial areas as a heating gas. The use of natural gas as a fuel for cars has also been on the rise steadily. Industries use natural gas as a heat energy carrier in heat generation.
Natural gas is not used in its crude form. It is processed, during which products like propane, ethane and butane are extracted. Natural gas prices also influence the prices of the by-products. Natural gas is primarily used as a fuel for the production of heat and electricity. Compressed natural gas is called CNG, which is used as a fuel for vehicles. Natural gas is used as fuel for air conditioners and boilers worldwide and also used in the manufacture of fertilizers.
Factors Affecting Prices
Natural gas prices are affected by a variety of factors. The primary factor is the demand of the US and is seasonal in nature. The events that have a significant impact on natural gas prices today are,
- Increase in inventory has a tendency to lower Natural gas future price.
- The US is the biggest consumer of natural gas, so the weather conditions have an impact on the price. A harsh winter in the US will cause natural gas pricesto soar.
- Hurricanes in the US also disrupt inventories, so this majorly affects Natural gas future price.
- Natural gas is a purer and cheaper option to crude oil. The contracts of natural gas and crude oil have shown strong correlations traditionally.
These factors dominate the natural gas prices on NYMEX and as a consequence, the MCX Natural gas future price.
Conclusion
Natural gas is a commodity that is used worldwide, but its spot price in India depends on how the supply and demand situation turns out. The natural gas commodity price depends on so many factors; hence, it is normal for it to fluctuate quite frequently. By following the trend of natural gas prices closely, it is possible to estimate the Natural gas future price and invest in it accordingly.
