Natural Gas ETF at 2012 High

October 12th at 7:00am by Tom Lydon

After the sweltering summer heat, natural gas prices are hovering around this year’s highs on lower-than-expected U.S. stockpiles. Now, natural gas exchange traded funds investors are waiting on the winter chill.

The United States Natural Gas Fund (NYSEArca: UNG) was up 4.0% Thursday. Since the April low of $14.25 per share, the fund is up 62.9%. The fund is now trading above its 200-day exponential moving average.

Natural gas futures were up 3.7% Thursday, trading around $3.6 per million British thermal units.

The U.S. Energy Information Administration revealed that domestic gas inventories increased rose last week by 72 billion cubic feet to 3.725 trillion cubic feet, well below market expectations, reports Joe Silha for Reuters. [Natural Gas ETFs Heat Up as Market Moves into Backwardation]

“It was a bullish (EIA) number, and it now looks like inventories will end the injection season not that much above last year,” Dominick Chirichella at Energy Management Institute, said in the Reuters article. “We could still see prices correct, but I don’t think it will last long.”

Inventories are still at record highs for this time of year and could end the stock-piling season above last year’s all-time high of 3.852 trillion cubic feet. However, this is still below the EIA’s 4.239 trillion cubic feet estimate for capacity.

Observers are now weighing on winter temperature projections, with the government calling for temperatures 20% colder than last year.

“Market bulls, who have sent prices higher in 10 of the prior 12 sessions, are counting on winter temperatures returning to normal and boosting gas demand and prices,” according to Dow Jones Newswires’ David Bird.

About half of U.S. households utilize natural gas as their heating source, reports Ray Levato for WHEC.

The EIA estimates that household natural gas spending will average $89, or 15% more this winter compared to last year. The agency also expects total natural gas consumption to increase 4.7% this year but dip 0.2% in 2013 on declines in electric power usage.

United States Natural Gas Fund

For more information on natural gas, visit our natural gas category.

Max Chen 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.

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