Why Natural Gas ETFs Are Winners in BP Disaster

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Few are coming out ahead in the BP (NYSE: BP) oil disaster, but natural gas has emerged as one. As a result, the United States Natural Gas ETF (NYSEArca:UNG) has seen heavy upward momentum in the last two weeks.

UNG is up more than 12% in the last two weeks. ETF Daily News reports that UNG often moves independent of the stock market, a plus in these uncertain times for stocks. [7 Commodity ETFs You Should Understand.]

The rapidly improving sentiment toward natural gas stems from a few things:

• It’s favorable as a political issue. For environmentalists, it emits less carbon than oil and coal, and after the BP disaster, it’s a plus that gas is mainly obtained via land drilling and not offshore drilling. Natural gas also continues to be far cheaper than oil. [A New Trend for Natural Gas ETFs?]
• A hot summer is in the forecast, which would increase demand.
• It’s hurricane season, too; any big hurricanes have the potential to interrupt production and therefore increase prices. [What Hurricane Season Means for Natural Gas ETFs.]

For more stories about natural gas, visit our natural gas category.

• United States Natural Gas ETF (NYSEArca:UNG)

• First Trust ISE-Revere Natural Gas Index (NYSEArca:FCG)

Tisha Guerrero contributed to this article.