Natural Gas ETFs Rally On Inventories, Weather

Includes: UNG
by: Tom Lydon

Natural gas exchange traded funds are heating up on speculation of an unseasonably cold spring and lower-than-expected U.S. supplies.

The U.S. Natural Gas Fund (NYSEARCA:UNG) was up 2.8% during trading Thursday. The fund has increased 9.4% over the past month. The natural gas ETF was up an additional 2.3% in early trading Friday.

"The cold temperatures, especially in the Midwest, are giving this market a boost," Phil Flynn, senior market analyst at Price Futures Group, said in a Bloomberg article. "I'm expecting an above-average drawdown and the cold temperatures are adding to demand."

The Commodity Weather Group LLC is predicting below-normal temperatures across the Dakotas and into the Northeast from March 23 through March 27.

Meanwhile, the U.S. Energy Information Administration announced that natural gas inventories are 18.5% lower year-over-year, the Associated Press reports. Nevertheless, inventory levels are still 11.4% above their five-year average.

Natural gas futures were 3.1% higher Thursday, trading at $3.79 per million British thermal units.

According to Chris Kimble at Kimble Charting Solutions, natural gas prices are breaking above falling channel resistance that's been in place since beginning of 2010.

U.S. Natural Gas Fund

Max Chen contributed to this article.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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