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Winter Chill Heats up Natural Gas ETFs

This article was originally published on ETFTrends.com.

With expectations in place for a cold winter, natural gas and the related exchange traded products are heating up. The United States Natural Gas Fund (UNG) is up more than 10% this week, stoking increased activity in the heavily natural gas fund.

A weather system will push across the northern U.S. over the next several days, bringing rain and snow, which could raise heating demand or demand for natural gas. Natural gas prices typically rise ahead of the winter as cold weather fuels indoor-heating demand. The November through march months have traditionally been the seasonal heating period when demand for U.S. gas consumption is at its peak.

“The $350 million United States Natural Gas Fund LP, or UNG, saw 8.8 million shares worth $253 million change hands on Monday. That marks its largest daily volume since February and more than three times the average daily traded value for the past year,” reports Bloomberg.

Action in Natural Gas Prices

Rising production out of the shale industry may cap natural gas prices. Genscape Inc. said its daily pipeline flow estimate revealed that the lower 48 states’ production setting a new record.

Bespoke Weather Services projected above-average gas-weighted degree days beginning Friday, Nov. 9, which may continue through Nov. 18, with heating demand expected to peak around Nov. 14, the Natural Gas Intelligence reports.

“Natural gas futures rose 8.6 percent Monday, their biggest gain in two years, as weather forecasts turned sharply colder for the eastern and central regions of the U.S. Northeast gas producers including Southwestern Energy Co. and EQT Corp. climbed more than 8 percent,” according to Bloomberg.

UNG, the most heavily traded natural gas ETF, is up more than 23% year-to-date, making it one of the best-performing commodities ETFs this year.

For more information on the natgas market, visit our natural gas category.