It’s been an interesting time for investors in the natural gas space. As hydraulic fracturing and horizontal drilling have become the extraction method of choice for E&P firms, production of the fuel has skyrocketed and led to a surplus of supply and high storage inventories. The huge surpluses have combined with slack demand for the fuel, causing prices to crater. At one point they were below $2 per MMBtu [for more oil news and analysis subscribe to our free newsletter].
With the largest single day drop in gold prices dominating the headlines, many consumers have overlooked crude oil’s significant fall in prices as of late. Even without the decline earlier this week, crude has been relatively weak as of late, with few expecting this to change soon. It seems that the pressure keeping prices at bay is only expected to rise in the coming months and years as this commodity may be slowly losing its dominance [for more oil news and analysis subscribe to our free newsletter].
High daily volumes coupled with erratic and sometimes unpredictable movements have given natural gas a big name in the commodity world, along with a reputation as a risky investment. With NG jumping more than 20% year-to-date and still climbing, many analysts are looking for a spark behind these gains, and they’re wondering how long the trend will last [for more natural gas news and analysis subscribe to our free newsletter].
For investors in the natural gas sector it certainly has been a tug of war the last few years. Prices for the fuel surged from a low of $1.96 per million Btus in early 2002 to a peak of $15.78 back in 2005 as the U.S. was predicted to be in short supply of the fuel. Since that time, advances in hydraulic fracturing (fracking) as well as horizontal drilling have helped unlock a virtual ocean of the natural gas within U.S. borders. That abundance has completely changed the supply landscape and has resulted in massive inventories of the fuel [for more natural gas news and analysis subscribe to our free newsletter].
This past year has been dominated by inclement weather that has left UNG reeling; natural gas futures have been all across the board. Despite making an impressive 70% run during the summer, this commodity still managed to end the year with losses topping 20%. With this past year set to be one of the warmest (if not the warmest) in U.S. history, it should come as no surprise to see the commodity struggle, as the winter months are key for demand and consumption [for more natural gas news and analysis subscribe to our free newsletter].
The winter months typically see demand kick up for natural gas, which is often reflected in the higher prices. But last year’s unseasonably warm winter put downward pressure on NG and its related investments alike. In fact, the United States suffered the warmest 12-month span in its history (as far back as records have been kept) between 2011 and 2012, making it very difficult for this commodity to get going. Unfortunately, the first part of the coming winter does not look to be shaping up much better [for more natural gas news and analysis subscribe to our free newsletter].
This week is riddled with more headwinds for equity markets as looming “fiscal cliff” woes and eurozone debt drama are colliding, prompting speculation that a “Perfect Storm” may already be developing on Wall Street. Profit-taking pressures will likely remain a dominant theme on the domestic equity front as policymakers look to avert the much-feared automatic trigger of tax-hikes; however, despite boasting a safe haven reputation, precious metals continue to drift sideways, offering little to no protection from looming uncertainties in recent trading sessions [for more economic news and analysis subscribe to our free newsletter].
The United State Natural Gas Fund (UNG) has been one of the most popular ETFs in the past few years, as investors have been using this product to make a play on the volatile world of natural gas. But for all of its popularity UNG has gained a reputation as one of the most hated funds in the industry [for more natural gas news and analysis subscribe to our free newsletter].
Natural gas is one of the more volatile commodities, allowing investors to bring home serious gains, but also serious losses. It has become a trading favorite thanks to its violent price swings and its paradoxical habit of being consistently inconsistent. With weekly supply reports from the EIA as well as constant investor speculation over future energy uses, it is no surprise to see this asset class surge in such high popularity for the brave investor. But with natural gas futures being a bit too complex and dangerous for the average joe, many have turned to the United States Natural Gas Fund LP (UNG) for their exposure to this coveted trading asset [for more natural gas news and analysis subscribe to our free newsletter].
After a punishing four year run, it looks as though natural gas futures may be ready to cross into the black for 2012. NG had been a very popular short for many investors since 2008, as its price cratered following the recession. Abundant resources and improved technology were among the culprits that turned natural gas into one of the cheapest fossil fuels around. That negative momentum carried through into 2012, but was stopped short as NG was determined to finish the year on a strong note [for more natural gas news and analysis subscribe to our free newsletter].