We have all seen crude oil soar to all time highs making huge profits, but this huge move could be repeated, or even exceeded as natural gas soars in value, based upon increased demand and limited supply.

If you are a seasoned trader or one who has never traded before, this article is for you. We will show you why natural gas is set to soar in value and how you can get in on the action for huge gains!

So why is natural gas set to soar? The reasons are compelling. Natural gas is a cheap and environmentally friendly alternative to crude, such as heating oil.

Natural gas is relatively cheap in price, environmentally friendly, in short supply and sitting at significant chart support and cheap in historical terms.

You therefore have all the ingredients for a bull market to take off.

Lets look at the background to natural gas and its money making potential as an investment. Environmentally friendly

Natural Gas is colorless, shapeless, and in its pure form, odorless. For many years, it was discarded as worthless.

Even today, some countries still waste it by burning it in giant flares, so big they can be seen from the Space Shuttle!

Yet, it is one of the most valuable fuels on earth.

Natural gas is made up mainly of methane a highly flammable substance when it burns there is no ash and very little air pollution, making it environmentally friendly.

Demand

Natural gas is a source of fuel for the US which is domestically produced and unlike crude is not subject to geo political concerns that can interrupt and can cut off supply.

Natural gas is highly valued in the US and now provides one-fifth of all the energy used in the United States. It is particularly important in private homes, where it supplies nearly half of all the energy used domestically.

The USA is using more natural gas than ever in power plants to generate electricity. Factories are also using more gas, both as a fuel and as an ingredient for a variety of chemicals.

We have strong demand that is set to rise over the coming months and years, but can supply keep up?

Supply

While natural gas is plentiful, there is still some uncertainty about how much it will cost to get it out of the ground in the future.

The longer-term picture for natural gas is one of demand outpacing the industrys ability to supply it.

Demand for natural gas in North America is increasing at around 3% per year, while production is only increasing at about 1%. Older wells are being depleted and newer wells are not producing enough, so for the next few years supply will not be able to keep pace with demand.

The new fuel of choice

The construction boom in the United States means more households are using natural gas.

Natural gas is the fuel of choice for new homes and industry as we have stated earlier as it burns cleaner and is cheaper than alternatives such as coal or heating oil.

The trend of demand outpacing supply is therefore expected to continue, at least through 2008. By this time liquefied natural gas is expected to be able to help meet rising demand, but until then huge upward price moves are anticipated. The technical picture

Natural gas has fallen over 50% from its 2005 peak and is now poised at key chart support.

In historical terms its cheap and as the US starts switching to natural gas due to high oil prices we have a trade to enter that could be at the start of a huge bull run.

Ok how to I take advantage of this potential?

The risk to reward looks great and the best way to trade this market is to take call options (i.e. looking for rising prices) and hold them longer term.

The advantages of options are they give limited risk on funds invested, but unlimited profit potential! Options are therefore an ideal way of making money from this market.

The supply and demand situation is compelling and with natural gas prices low in historical terms, the potential for gains is huge and you could profit if you take action now!