Inside Natural Gas and UNG’s Wild Q2

After one of the worst runs in the commodity’s history, natural gas was able to make a few positive strides over the past three month stretch. Most notably, the ultra-popular United States Natural Gas Fund (UNG) was able to actually come away with gains on the quarter, a major win for a fund that was largely considered to worst performing ETF of all time. During the first quarter of 2012, UNG gave up a miserable 38.4%, but was able to tack on 21.2% in Q2, giving NG traders a glimpse of hope as we head into the summer months [see also 25 Ways To Invest In Natural Gas].

Natural Gas and Q2

Between late April and late May, UNG was able to make massive strides, as low supplies and fortunate weather helped boost demand for the fossil fuel and ETF alike. But the commodity took swift blow as May came to a close, putting it back to where it started for the quarter. Just when natural gas bulls finally caught a break, higher than average supplies and a sputtering economy drove prices back into the gutter. But as summer months began to kick in and temperatures across the country rose, demand for NG spiked [see also Jim Rogers Says: Buy Commodities Now, Or You’ll Hate Yourself Later].

For several weeks, the EIA Natural Gas Storage Report showed lower than expected inventory, propelling UNG higher including gains of 15% and 7% on two separate sessions. For a fund that was forced to reverse split 1 for 4 in February (not the first reverse split UNG has endured, mind you) the recent boost has been more than welcomed. After all, UNG is one of the most popular trading instruments in the world, as the fund has over $1 billion in assets and an average daily volume topping 12 million. Likewise natural gas futures are among the most popular with active investors, keeping this commodity consistently in the headlines [see also Why You Should Invest In Natural Gas: The Fuel of the Future].

The Future of Natural Gas

Predicting where natural gas will end up is more or less impossible. It seems like every other day there is a break through in fracking or more deposits found around the country, yanking prices back and forth. Truthfully, natural gas exposure is typically left for active investors, as its swift daily movements have been known to burn those who were not fully prepared. Though long-term positions can be utilized via stocks and some funds, the majority of natural gas positions come from traders. That being said, the trend is your friend, as trading habits will likely have a massive impact on the commodity [see also What Is Contango?].

Also note that weather is one of the biggest price drivers of NG, and the recent heatwave around the country is sure to have an effect on natural gas. Keeping a close eye on futures and UNG will pay off well, as it is most active during the summer months. Another major price driver will be hurricane season, which is currently ramping up in the Southeast. A number of hurricanes in the past have knocked out key supply points for NG and wreaked havoc on prices. UNG’s wild second quarter will more than likely be followed by another volatile three month stretch. Stay disciplined and stay prepared.

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.

This entry was posted in Commodity ETFs, Commodity Futures, Energy, Natural Gas and tagged . Bookmark the permalink.

Commodity HQ is not an investment advisor, and any content published by Commodity HQ does not constitute individual investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities or investment assets. Read the full disclaimer here.

8 Responses to “Inside Natural Gas and UNG’s Wild Q2”

  1. [...] its competitor by such a large margin, despite both commodities being relatively similar in the grand scheme of things. The past two years have seen a fair amount of volatility from the Middle East, a region that [...]

  2. [...] The US Commodity Funds United States Natural Gas Fund (UNG) was one of the worst performers, shedding 5.33% on the day. After the commodity’s recent rally, natural gas futures finally eased off as weather reports indicated a reprieve from the U.S.’s severe heatwaves in the near future [see also Inside Natural Gas and UNG's Wild Q2]. [...]

  3. [...] 2. Inside Natural Gas and UNG’s Wild Q2 at Commodity HQ: [...]

  4. [...] The United States Natural Gas Fund (UNG) was one of the best performers, gaining 3.58% on the day. As weather forecasts reported the continuation of record high temperatures, this ETF along with natural gas futures soared today. UNG gapped significantly higher at the open, only to inch even higher throughout the day. UNG settled just below its high of $19.76 a share [see also Inside Natural Gas and UNG's Wild Q2]. [...]

  5. [...] As the beginning of summer kicked off, severe heat waves swept across the majority of the country, forcing Americans to crank their A/Cs to find some kind of reprieve from the sweltering heat. The larger drawdowns of natural gas stockpiles forced prices to surge as demand continued to increase. Although many might not have enjoyed the oppressive weather conditions, investors in ProShares’ BOIL sure had plenty of compensation for their “discomforts.” Over the last month, the fund has skyrocketed, gaining over 30% during a four-week period (though BOIL cooled off a bit in Tuesday trading, losing about 10%) [see also Inside Natural Gas And UNG's Wild Q2]. [...]

  6. [...] The United States Natural Gas Fund (UNG) was one of the best performers today, gaining 3.58% during the session. As investors wait for tomorrow’s natural gas storage report, buying pressures increased, causing this ETF to rise along with natural gas futures today. UNG gapped significantly higher at the open, only to surge even higher throughout the day. The fund settled just below its high of $19.51 a share [see also Inside Natural Gas and UNG's Wild Q2]. [...]

  7. [...] By far the most popular natural gas ETF in existence, UNG is home to over $1.2 billion in total assets. The fund is a trader’s favorite, exchanging hands over 13 million times each day. UNG had been called one of the worst ETFs of the last few years as NG’s debilitating losses forced this fund to reverse split multiple times just to stay open. But now that natural gas is clawing its way back, UNG has been a lucrative investment. The fund tracks front-month natural gas futures and charges an annual fee of 60 basis points. UNG has gained over 50% in the trailing three months [see also Inside Natural Gas and UNG’s Wild Q2]. [...]

  8. [...] average. Since UNG is comprised of natural gas futures contracts, however, it frequently exhibits high levels of volatility, as the commodity is known to make major swings in as little time as an hour [see also The Rise [...]

Leave a Reply

  • Subscribe

    • RSS Icon   Twitter Icon
    • Sign up for free today:
  • Search