Want to play Natrual Gas? Try GAS.TO

it.uncle

If you believe that everything has a price and if you think about playing Natrual Gas for long term, there is what I found in last few days research about Natrual Gas Commotity. Here is the original information source.

http://www.claymoreinvestments.ca/etf/fund/gas

The Claymore Natural Gas Commodity ETF has been designed to track the performance of the
benchmark NGX Canadian Natural Gas Index,  less fees and expenses. The ETF will provide
non-leveraged exposure to the Alberta natural gas market, by investing in physical natural gas
forward contracts. The ETF will not use leverage and targets a 1:1 relationship between assets and natural gas
exposure. In addition, the ETF will provide this exposure without being directly involved in the
exploration, operation, reserves, engineering and management risks associated with an
investment in entities that explore for, produce and sell natural gas.

Source: The NGX Canadian Natural Gas Index replicates an exposure to the monthly contract (1-month spot price) for physical
natural gas for delivery on the TransCanada Mainline (AECO/NIT) in Alberta, that is rolled to the next contract prior to delivery.
AECO is the most liquid physical natural gas delivery point in Canada. The index is posted daily at www.ngx.com.
It is Spot Price. ( not the contract price).

Overview of Natural Gas
Natural gas is one of the most important energy commodities. Not only is it the cleanest burning fossil fuel, its use spans residential, commercial, and industrial users. It is commonly used for heating and cooling applications but also in the creation of other energy sources. It is a key fuel in the extraction process for the Canadian Oil Sands and in the generation of Electricity. Natural gas is also an important feedstock in the production of fertilizers and numerous petrochemicals.
The importance of natural gas spans many applications and its importance is growing as the world looks for environmentally clean and efficient fuels.
Canadian natural gas is critically important to both domestic Canadian markets and the massive US market as it is easy to transport. Canadian natural gas accounts for approximately 20% of total natural gas production in North America, and of that, roughly 80% is produced in Alberta.

Canadian natural gas is the largest foreign source of gas to the United States. There is currently no easy way for the smaller investor to participate directly in the Natural gas market in Canada unless you are a wholesaler and have significant infrastructure, approvals and capital invested in the physical natural gas market. The ETF provides a way to participate in the commodity price movements. Each dollar invested will target to represent a dollar of commodity exposure.
What fundamental factors drive the price of natural gas?
• Weather – Heating /Cooling demand • Production decline rates
• Oil sands production • Pipeline transportation constraints
• Electricity generation • Storage Balances e
• Fertilizer production • Liquified Natural Gas (LNG)
• Petrochemical production • Natural Disasters (i.e. Hurricanes)
• Drilling and Exploration Activity


My understanding:

Buying GAS.to is not buying any under layer assets. It is just tracking the index. Like buying XEG. So it is different from buying ETF HNU.to or UNG which are actually buying contracts.
So, your investment would not be eroded because of contango and contract rollover.

If you do not believe Natrual Gas Price will go to zero, then do something good to your money.

Good Luck!

So... Long...
Until next time, see ya

ybgx

Another USO style ETF

it.uncle

Another USO style ETF
ybgx 发表于 2009-6-28 16:55

My understanding:

Buying GAS.to is not buying any under layer assets. It is just tracking the index. Like buying XEG. So it is different from buying ETF HNU.to or UNG which are actually buying contracts.


You can do some research before you go Long. It is your money, then it is your decision.

it.uncle

Found more about the NGX index. Let us do the research together.

NGX Canadian Natural Gas Index™ is a commodity index based on natural gas as traded on NGX. This Canadian dollar denominated index tracks the performance of Alberta's "One-month spot" physical market price. The index is an Excess Return index where the return reflects an investment rolling from month to month and not any Collateral Return. The initial benchmark value of the index was set at 1000 as of December 19, 2007. The index is calculated on a daily basis as of 2:30PM ET (12:30PM MT).

Date             Index  Change Prompt Price Deferred Price
     

Jun 28, 2009 425.33 0.00 3.2800 3.5100
Jun 27, 2009 425.33 0.00 3.2800 3.5100  
Jun 26, 2009 425.33 6.59 3.2800 3.5100  
Jun 25, 2009 418.73 11.56 3.2500 3.4500  
Jun 24, 2009 407.17 -16.37 3.1425 3.3675  
Jun 23, 2009 423.54 -8.45 3.2675 3.5050  
Jun 22, 2009 431.99 -15.58 3.3275 3.5975  
Jun 21, 2009 447.57 0.00 3.4475 3.6850  
Jun 20, 2009 447.57 0.00 3.4475 3.6850  
Jun 19, 2009 447.57 0.32 3.4475 3.6850  
Jun 18, 2009 447.25 -24.67 3.4450 3.7450  
Jun 17, 2009 471.91 14.28 3.6350 3.9400  
Jun 16, 2009 457.63 -0.32 3.5250 3.8250  
Jun 15, 2009 457.96 51.28 3.5275 3.8450  
Jun 14, 2009 406.68 0.00 3.1325 3.4125  
Jun 13, 2009 406.68 0.00 3.1325 3.4125  
Jun 12, 2009 406.68 1.95 3.1325 3.4125  
Jun 11, 2009 404.73 31.16 3.1175 3.3750  
Jun 10, 2009 373.57 3.57 2.8775 3.1100  
Jun 09, 2009 370.00 -5.84 2.8500 3.0650  
Jun 08, 2009 375.84 -25.96 2.8950 3.1100  
Jun 07, 2009 401.81 0.00 3.0950 3.2825  
Jun 06, 2009 401.81 0.00 3.0950 3.2825  
Jun 05, 2009 401.81 12.66 3.0950 3.2825  
Jun 04, 2009 389.15 0.00 2.9975 3.1525  
Jun 03, 2009 389.15 -35.05 2.9975 3.1500  
Jun 02, 2009 424.20 -21.75 3.2675 3.3975  
Jun 01, 2009 445.95 39.60 3.4350 3.5425  

Original Link: http://www.ngx.com/natgas.html

I noticed that this index does not follow the movement of UNG. There is implication between the future market and this index but there is certainly difference.

You can see the above red lines the prompt price was at 2.89 CAD/1,000,000BTUs.

1 Barrel of Oil = 5,800,000 BTUs ( that is why some people say the price ratio between Natrual Gas and fossile oil is 1:6)

So, if you just do a math here, 1 Barrel of oil should < 18 CAD.

With the new engergy bill passed in the past weekend, we can certainly assure that the comsuption of Natrual Gas will start picking up from now.

I am looking at the long term. For short term, we are seeing a very low Natrual Gas Price. Is it possible to go lower? Sure, let us say 2$/M BTUs, so what? I have learned from my life experience that there is one sure thing in this market, "Nothing is free"

Again, I am just sharing some information with your guys. Not suggesting any timing or buying opportunity.
( I have not started yet but I will start from tomorrow).

风清扬

good one, thanks

BTW, what is the difference between GAS and UNG? thanks again

yuelm2008

good