Recently, I was reviewing how the natural gas market has evolved over the past few years, and honestly, there are interesting things for anyone looking to invest in natural gas in 2024 and beyond.

The thing is, after those brutal peaks in 2022 (when everything skyrocketed due to the situation in Ukraine and sanctions), prices collapsed during 2023. They fell nearly 73% from the highs of August that year. Many people only saw the drop, but in reality, that opened lucrative opportunities if you knew how to position yourself, both upward and downward.

To understand why investing in natural gas remains relevant, you need to look at the numbers. Natural gas went from representing 16% of the global energy supply in 1973 to almost 23% in 2019. That is, we are consuming more and more. Of course, the geopolitical context remains critical: Europe and China are diversifying suppliers, the United States has become the leading global LNG producer, and Russia remains an important player but reoriented toward Asia.

What’s coming in 2024 is more balanced but with volatility. Global demand is expected to grow around 1.9% (an additional 78 bcm), mainly driven by Asia-Pacific and the Middle East. Regarding supply, it is expected to increase by 2%, with Eurasia, the Middle East, and the United States as the main contributors. Experts project that prices could recover: TTF in Europe could rise 25% to around $17/MMBtu, while Asian LNG would increase by 20%.

Now, if you want to invest in natural gas without complications, you have several options. The most direct is through CFDs, which allow you to trade price fluctuations without owning the asset. It’s agile, liquid, but of course, carries risk due to leverage. Alternatively, many prefer stocks of producers like Exxon Mobil or Chevron, which are less volatile than the pure commodity. Since the start of 2022, XOM yields 65% and CVX 27%, while spot natural gas fell 27%. That says something about the relative stability of companies versus the commodity.

If you decide to trade natural gas CFDs, you need to understand margin, leverage, and fluctuations. A standard contract is 10,000 MMBtu. If the price is at $7.114/MMBtu, the value is $71,140. With an initial margin of 10%, you need $7,114 in your account to control that (leverage 10X). The maintenance margin is typically 5%. Each minimum move of $0.001/MMBtu generates $10 profit or loss per contract. The math is simple: if you short at 7.114 and buy at 6.990, you gain $1,240 (a 17.4% return on your initial margin). But remember: it works the same in the opposite direction.

Volatility is real. Factors like extreme weather, geopolitical tensions, and supply disruptions can move the market unpredictably. That’s why it’s not advisable to try to predict the market but to follow signals as they develop. Use stop loss and take profit orders. Don’t risk more than 3-5% of your capital per trade.

In summary: investing in natural gas remains viable in 2024, but it requires discipline. The outlook suggests a price recovery, global demand will continue to grow, and you have multiple ways to position yourself according to your risk profile. Whether trading CFDs or preferring producer stocks, the market offers opportunities. Just make sure you understand what you’re doing well before putting money in.