| Learn about Natural Gas ETFs |
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| Written by Mark Ford |
| Sunday, 17 January 2010 19:44 |
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Natural gas prices have fluctuated from a low of $2.50 to over $6 this year. They are now trading around $5. When there are large ranges like that, a sharp trader may be able to profit from this.
Natural gas prices have fluctuated from a low of $2.50 to over $6 this year. They are now trading around $5. When there are large ranges like that, a sharp trader may be able to profit from this. If you want to trade natural gas, there are several ways to trade this market. This article will review a few of the ways you can enter this market. Your choice of trading vehicles range from pure gas futures trading to investing in companies that explore and drill for natural gas. Why invest in the natural gas sector? Natural gas is gaining in in usage in the United States. The reason for this is that natural gas burns cleaner than coal. Since coal produces most of our electricity, there is pressure to convert coal generating plants to run on natural gas. Plus since gas burns cleaner, it is more environmentally friendly. Another reason to trade natural gas is because it is plentiful in the United States. Many people are pushing for more drilling here in the U.S. to tap into our vast reserves. Americans wants to get away from our dependence on foreign oil and want to use energy resource right here at home. Big investors have recently entered into the natural gas market. Last year oil tycoon T. Boone Pickens was running television ads touting the benefits of switching to natural gas. ExxonMobil, the worlds largest oil company recently purchased XTO Energy, a large player in the natural gas market. If a billionare and a large oil company are investing in natural gas, shouldn't you? How does a Natural Gas ETF work? ETF is an Exchange Traded Fund. An ETF is similar to a mutual fund. An ETF can be made up of several stocks in that sector. An example would be the SPDR S&P Oil & Gas Exploration & Production ETF, ticker symbol XOP. This fund tries to replicate the total return performance of the S&P Oil and Gas Exploration & Production Select Industry Index. This fund holds stocks in natural gas companies that are involved in exploration and production of natural gas. Some of the stock that make up this fund are ExxonMobil, Chevron, Conocophillips, Occidental an Chesapeake Energy Corp. Please refer to the funds prospectus for the current holdings of the fund. One of the most popular Gas ETFs is the United States Natural Gas Fund, ticker symbol UNG. This fund tries to replicate the daily percentage moves of the natural gas futures contract on the New York Mercantile Exchange. This fund invests in the spot month futures contract. When the contract has 2 weeks left before expiration, the fund then rolls the contract to the next contract month. This is just an introduction to trading Natural Gas ETFs. Continue your research on this profitable market. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. You can find more about natural gas etfs and learn how to trade gas etf Get a totally unique version of this article from our article submission service |