IFC Markets Forex Broker

WTI Crude vs Natural Gas - Gas Oil Trading

WTI Crude vs Natural Gas Investing

Type:

PCI

Instrument : &GAS/OIL

Status: Closed Trading
Change:
Prev. closing
Open price
Today, max.
Today, min.

Natural Gas vs Oil Description

The personal composite instrument &GAS/OIL reflects the price dynamics of natural gas against American light crude oil West Texas Intermediate (WTI). The base part of this instrument is composed of 10 million British thermal units (10 mmBtu) of natural gas, and the quoted part - 1 barrel of crude oil of the WTI grade.

The base part is represented by the #C-NATGAS instrument – the continuous CFD on natural gas futures from the Henry Hub American terminal. Oil is represented by the instrument OIL- the continuous CFD on WTI oil futures. It should be noted that the &GAS/OIL spread instrument is used for arbitrage and trading inside a price channel: buying near the support line, selling near the resistance line. You can find the theoretical foundations for the index formation in the “Application field” section below.

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Structure

Parameters

Trading hours

Application field

Structure

PCI Components and their volume
Swipe table
&GAS/OILAssetVolume / 1 PCIPercentageVolume (USD) / 1 PCIUnit of measurеment
Base part1#C-NATGAS22716.9471100.000100000.0000mmBtu
Quoted part1OIL1267.106100.0000100000.0000barrels

Parameters

PCI main trading conditions
Swipe table
The volume to calculate Swap and 1 pip value
1
The size of 1 pip
0.00001
Margin in USD for the volume and leverage of 1:100
613.58 USD
Creation date
2014-11-25
StandardBeginnerDemo
Fixed spread, pip 170170170
Floating Spread, pip 170170170
Order distance, pip ---
Swap (long/short) in pips on Vol -27.142 / -6.287-27.142 / -6.287-27.142 / -6.287
Available
volumes
>=0.13 0.01 – 1.13 >=0.01
The value of 1 pip in USD for the Vol 000

Trading hours

PCI active trading hours
Week dayTrading hours (CET)Local trading hours
Monday 01:00 — 23:0001:00 — 23:00
Tuesday00:00 — 23:0000:00 — 23:00
Wednesday00:00 — 23:0000:00 — 23:00
Thursday00:00 — 23:0000:00 — 23:00
Friday00:00 — 23:0000:00 — 23:00

Application field

How can PCI be applied in trading?

Characteristics of the personal composite instrument:

  • Oil and gas are partially substitutable forms of hydrocarbon fuel. The energy conversion coefficient between these two resources is constant and 1 barrel of oil is equivalent to 5.55 mln British thermal units based on this conversion rate. Thus in the long term perspective the &GAS/OIL PCI will trade in a sideways range.
  • The instrument possesses minimal economic sensitivity towards fundamental events as both types of raw materials are extracted and traded in US. This makes it possible to detect low volatility movements primarily within sideways ranges.
  • The US production of shale oil and gas has been rising since 2012. After partial modification the same drilling rigs can be used for extracting both oil and gas. Therefore the American mining companies can adapt the equipment at various wells. Currently they are interested in increasing the oil production. The increasing supply pushes oil prices lower while gas is rising. This happens partially due to increased seasonal demand in winter and partially - due to decreased number of drilling rigs.

Perspectives

We do not exclude the possibility of continuing downtrend in oil markets. At the same time the natural gas prices may rise as investments in natural gas extraction industry fall proportionally with increasing investments directed towards expanding oil production. In 2008 the traditional gas output in US exceeded shale gas production by a factor of 7. Wherein the shale gas production accounted only for 11% of total output of natural gas. Last year the shale gas production exceeded the traditional gas output by 6% and the shale gas production accounted for 40% of total natural gas production in US. The number of wells was increased by 10.5 thousands to substitute the conventional gas with shale gas production. Perhaps part of this equipment could be reconfigured for shale oil production.


Limit volumes (USD) for base and quoted parts = 100000.00 ; 100000.00.

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