If we look at the global financial markets, the price of natural gas has fallen by about 40%, and here comes the moment to ask ourselves whether this negative decline represents an opportunity for investors. To analyze this situation we decided to compare the average return of the asset against seasonality. This is cautioned, in no way should it be taken as investment advice, and investors should keep in mind that natural gas is an extremely volatile commodity!
The two periods in which the price of natural gas fell below $2 were March 2016, when it reached a low of $1,611, and June 2020, with a low of $1,250. It is the last price that is the lowest point of the raw material for decades, but it should be taken into account that it was reached at a time of mass panic, due to the then spreading coronavirus.
If we look historically at what gas does one year after reaching a price below $2, we can see that in both years there is a positive performance the following year. After the decline in 2016, the commodity is up 98 percent, and the next time it is below $2, it is again up 45 percent above its marked bottom.
The two periods in which the price of natural gas fell below $2 were March 2016, when it reached a low of $1,611, and June 2020, with a low of $1,250. It is the last price that is the lowest point of the raw material for decades, but it should be taken into account that it was reached at a time of mass panic, due to the then spreading coronavirus.
If we look historically at what gas does one year after reaching a price below $2, we can see that in both years there is a positive performance the following year. After the decline in 2016, the commodity is up 98 percent, and the next time it is below $2, it is again up 45 percent above its marked bottom.
