Analysis using the ICIS volatility index for the German NCG natural gas hub shows that volatility bottoms out in regular intervals on the rolling front-month contract. Changes in volatility can give clues about price trend reversals. Low volatility indicates that traders are pouring resources into an existing price trend. An increase in volatility suggests rising indecision in the market and decreasing confidence in the prevailing trend.
This infographic presents the results of cycle analysis of the NCG volatility index. Europe’s gas markets are especially prone to cycles because price moves are closely linked to regular changes in fundamentals.
The new ICIS German NCG and GASPOOL and Italian PSV volatility indices are 20-trading day rolling values calculated based on standard deviations of price percentage changes. These now appear in the ICIS European Spot Gas Markets (ESGM) report alongside volatility indices for British NBP and Dutch TTF gas prices.
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