Natural Gas, UNG On a 70% Rally

Natural gas has been one of the most talked about commodities this year, as its prices tumbled at the start of 2012. Up until a few months ago, NG had been one of the worst performing commodities over the past few years, as the recession started the fossil fuel on a slippery slope that it would never fully recover from [see also 25 Ways To Invest In Natural Gas].

In fact, low prices and a supply surplus forced many major companies to switch to oil exploration as opposed to doing the same for gas. “Last April about half of the nation’s 1,800 or so drilling rigs were looking for oil while half were looking for gas, according to IA. By this May over twice as many were looking for oil, and EIA has reported recent natural gas production numbers slightly below levels seen at the end of last year” writes Steve Hargreaves.

But the past few months have watched this asset claw its way higher as temperatures around the country have risen. Searing heat has led to a much higher demand for gas-powered appliances and helped to alleviate some of the growing stockpiles. This caused natural gas prices to tack on nearly 70% over the trailing three month period (despite plenty of volatility along the way). As such, a number of natural-gas based investments have performed exceptionally well, leading many to make bets on the industry. The only question that remains is how long this rally will last and if you will be able to time it properly [for more news on natural gas subscribe to our free newsletter].

Notable Performers

Below, we outline some of the best performers during the NG rally that you may want to keep a close eye on.

• United States Natural Gas Fund (UNG) - 51%
• 3x Long Natural Gas ETN (DGAZ) - 163%
• Ultra DJ-UBS Natural Gas (BOIL) - 89%

Don’t forget to subscribe to our free daily commodity investing newsletter and follow us on Twitter @CommodityHQ.

Disclosure: No positions at time of writing.