An Unusual ETF to Play Natural Gas

August 6th at 11:00am by Tom Lydon

Natural gas exchange traded funds (ETFs) have been swaying on mixed reports of higher supplies, lower demand a busy hurricane season and torrid weather across the United States. What’s the story?

Natural gas inventories crept up last week, but they’re still 4.3% below year-ago levels, reports the Associated Press. Whether those inventories get depleted depends on the weather; the hurricane forecast has been downgraded. As we’ve seen in recent years, though, hurricanes have a habit of delivering surprises. It also only takes just one to inflict some real damage and send prices soaring. [Why Natural Gas is Getting a Late Summer Boost.]

Jennifer Cummings for Automated Trader reports that Chesapeake Energy Corp.’s (NYSE: CHK) has stepped up efforts to shift away from drilling for natural gas and into the more lucrative area of oil and natural gas liquids, which is beginning  to pay off.  Chesapeake is still  a natural gas company, with gas accounting for 90% of total production in the second quarter. But the company is aiming to have a quarter of its production from liquids by 2015. [All About MLP ETFs and ETNs.]

There are several ways to play natural gas directly, but there are alternative ways to get exposure lurking about. The ETF Professor on Benzinga reports that The Oklahoma ETF (NYSEArca: OOK) tracks a swath of Oklahoma-based companies, so it is not strictly an energy ETF, but energy names do dominate about 60% of the fund. Oil and natural gas have performed decently over the past month, putting OOK’s performance in line with that of other, more focused, funds. It’s up 9% in the last month.

For more stories about natural gas, visit our natural gas category. According to the ETF Analyzer, there are 10 ways to play natural gas directly, including these three:

  • First Trust ISE-Revere Natural Gas (NYSEArca: FCG): up 6.9% in the last month
  • United States Natural Gas (NYSEArca: UNG): down 1.4% in the last month
  • SPDR S&P Oil & Gas Equipment & Services (NYSEArca: XES): up 14.6% in the last month

Natural Gas ETFs

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.