U.S. Markets closed

Natural Gas ETFs Outperformed Natural Gas Last Week

Robert Scott
Natural Gas ETFs Outperformed Natural Gas Last Week

Energy's Performance Last Week—and What's on the Agenda This Week(Continued from Prior Part)## Natural gas ETFsBetween January 4 and January 11, the United States Natural Gas ETF (UNG) rose 4%, while the ProShares Ultra Bloomberg Natural Gas ETF (BOIL) rose 5.9%. These ETFs track natural gas futures.UNG holds active natural gas futures contracts, while BOIL tracks daily changes in the Bloomberg Natural Gas Subindex.UNG has outperformed natural gas February futures, which have risen 1.8% in the past five trading sessions. Gains in natural gas prices can be positive for natural gas–weighted stocks. Range Resources (RRC), Southwestern Energy (SWN), Gulfport Energy (GPOR), and Chesapeake Energy (CHK), the strongest natural gas–weighted stocks, rose 7.6%, 11.5%, 11.6%, and 20.9%, respectively, last week.## Long-term returns and the forward curveBetween March 3, 2016, and January 11, 2019, natural gas active futures rose 89.1% from their 17-year low, while UNG and BOIL returned 12.7% and -38%, respectively. Since March 3, 2016, UNG and BOIL have delivered lower returns than natural gas active futures, possibly due to a negative roll yield. BOIL’s actual and expected returns could also be different due to daily price changes. As of January 11, natural gas futures for delivery between February and May 2019 closed in descending order, which could be a positive sign for these ETFs’ returns.Continue to Next PartBrowse this series on Market Realist: * Part 1 - The China Factor Could Drag on Oil This Week * Part 2 - Oil’s Rise Wasn’t the Only Driver of Energy’s Score Last Week * Part 3 - These Upstream and Oilfield Stocks Outperformed Energy Last Week