Consisting mainly of methane, Natural Gas is a fossil fuel used to make various materials and chemicals. Also used as energy for heating, cooking and electricity generation, this commodity is produced in different countries including Russia, the U.S and Saudi Arabia.
Considered the third most popular energy source with 24% of total consumption worldwide, Natural Gas was initially seen as a waste product when it was first discovered whilst oil drilling. Today, it has been demeaned by environmentalists due to atmospheric methane’s effect on climate change. Fracking, which is the process of recovering gas from shale rock, is also a cause for pollution concerns.
Trading Natural Gas
There are several factors that can affect the price of Natural Gas. They include environmental impacts, weather conditions, extraction costs and stockpiling.
Cold weather in certain regions can lead to a surge in demand for Natural Gas as it is required for heating solutions. Countries like Russia, the U.S, China or Japan are among the highest natural gas consumers. Weather conditions then determine the demand for this commodity, which in turn regulates its prices.
Environmental Impacts and Extraction Costs
As natural gas fields dry up, the drilling of fossil fuels is disrupted. Producers are then forced to explore new deposits and extract from ocean beds and shale, rocks which require more funds. This ultimately pushes the price of this commodity up.
There is no organization which controls the production of natural gas. Suppliers, however, will limit gas production when its price drops, creating an artificial floor. This is occasionally countered by gas dumping when a nation producing the fuel endures an economic crisis.
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