Natural Gas ETF Shakes Off Large Inventory Injection

ETF Trends

Despite the higher-than-expected supply injection last week, natural gas exchange traded funds are still showing some fire after experiencing a large pullback earlier this week.

The United States Natural Gas Fund (UNG) gained 0.5% Thursday. UNG declined 4.3% over the past week.

Natural gas futures were also up 0.5% Thursday, trading around $3.64 per million metric British thermal units.

The Energy Information Administration revealed stocks increased 87 billion cubic feet in the week ended Oct. 18, compared to analyst expectations of 79 bcf, Investing reports.

Inventories were 54 bcf higher last week year-over-year, but lower than the 75 bcf five-year average.

Total natural gas storage was at 3.741 trillion cubic feet, compared to the five-year average of 3.664 tcf.

While the supply increased last week, traders continue to look toward weather forecasts, which are pointing toward colder-than-normal temperatures across most of eastern U.S. in the short-term. However, long-term forecast models predict above-average weather.

“The (EIA) build was above expectations, and prices initially came off, but I think the market is oversold,” a Massachusetts-based trader said in a Reuters article. “The weather (extended outlook) is turning a little milder, but it’s tough to get too bearish below $3.60 (per mmBtu).”

There are other ways for investors to take advantage of rising natural gas prices, namely the equity-based First Trust ISE-Revere Natural Gas Index Fund (FCG) . FCG has gained 12.8% over the past three months and is up 25.6% year-to-date, whereas UNG declined 6.5% over the past three months and is down 2.1% year-to-date. [A Safer ETF for a Nat Gas Rally]

United States Natural Gas Fund

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Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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