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Natural gas stands out as a high-demand commodity, heating up stocks and attracting traders and investors worldwide.
But does this fossil fuel have specific trading hours, or is it an all-you-can-trade buffet?
Understanding the Natural Gas Market
It's important to know how the natural gas market works as a whole before understanding the trading hours.
Natural gas has many uses, like heating, cooking and generating electricity, to name a few, creating a strong market position for this commodity. The need for more clean energy in this climate today has also made natural gas more popular than its counterparts, coal and oil.
This shift is also reflected in the natural gas production process. Drilling and hydraulic fracturing are techniques used to get natural gas from rock layers or coal beds below the ground. Once extracted, it is processed to remove impurities so that it can be sold commercially. Transporting the gas through pipelines or, in cases where pipelines aren't possible, as liquid natural gas (LNG) in ships makes it easier to get around the world, which further increases its importance in the global energy market.
Natural Gas Trading Hours
This commodity has certain trading hours based on where and how you're trading it.
The futures market offers traders and investors the opportunity to start trading with natural gas futures, specifically the Henry Hub natural gas futures sold through the Chicago Mercantile Exchange Group (CME Group). According to CME Globex—an open-access electronic trading system—the Henry Hub natural gas futures trade almost 24 hours a day throughout the week. However, it is important to note that there is an hour-long break. From Sunday to Friday, the trading hours are between 6:00 pm and 5:00 pm, with a 60-minute break.
The future prices of natural gas are set in contract units: 10,000 British thermal units (MMBtu) and serve as a standard for the market.
Source: CME Globex
The fact that this trading window is almost always open demonstrates the globalised nature of the energy markets today, allowing market participants from different time zones to participate at times that work for them. It also makes it easier to find prices, which is important for a commodity as volatile as natural gas.
Henry Hub natural gas represents the industry benchmark because it represents the heart of natural gas futures trading in the United States. Its importance stems from an extensive network of pipelines and storage facilities that ensures a stable and consistent natural gas supply. Traders usually keep a close watch on Henry Hub's changes and trends, which can influence decisions globally.
Contracts for Differences (CFDs):
You could also trade natural gas through CFDs at FP Markets.
Unlike the futures contract above (settlement method: deliverable), CFD contracts are always cash-settled. This means that CFD traders can speculate on natural gas prices without taking physical ownership when using CFDs. However, like futures, CFDs offer traders the flexibility to take advantage of rising and falling markets by going long or short, as well as offering favourable hedging options thanks to both markets being leveraged trading products.
With FP Markets, you can trade natural gas against the US dollar: XNG/USD on MetaTrader 4 (MT4), MetaTrader 5 (MT5) and cTrader. According to MT4’s specification tab, there is a 1-hour break between midnight and 1 am Monday until Thursday and between 11:45 pm and 1:00 am on Friday.
Best Times to Trade Natural Gas
Keep in mind that US holidays can affect the market. Trading hours could get shorter, or the market could close completely.
During US trading hours, the market tends to be more active, especially during the release of important market reports, like the Natural Gas Storage Report (which comes out every Thursday by the US Energy Information Administration). Prices tend to fluctuate because of these reports, elevating volatility and providing opportunities to trade.
When it comes to the XNG/USD pair, this tends to show the most movement during the overlap of the London and New York sessions, typically between 8:00 am and 12:00 pm New York time. This period sees the convergence of European and US traders, resulting in higher trading volumes and increased price movement.
There are also strong seasonal trends in the natural gas market. There is a lot more demand for natural gas in the winter, especially in the Northern Hemisphere, because of its role in heating. As a result, prices may change more quickly as the market reacts to the stress on supply lines and store levels. Extreme winter weather conditions can increase the demand further, which can cause prices to go up quickly.
During warmer months, fewer homes use natural gas, which could cause prices to drop and the market to be less volatile. However, it could be partially offset by the higher need for energy production, especially during very hot spells, since natural gas is used to power air units and other cooling systems.
If traders monitor weather forecasts, it may help make more informed trading decisions. They can better understand the market's trends and take advantage of opportunities or manage risks that come with changes in supply and demand.
For trading hours, natural gas is essentially open around the clock to trade, with only a small break in between.
Consider opening a demo account with FP Markets to start trading natural gas from any one of our world-class trading platforms. This will allow you to analyse and even trade the market using simulated funds, in addition to familiarising yourself with your trading platform of choice.
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