With the fundamental supply and demand conditions on their side, natural gas related exchange traded funds are breaking out from a rut that extended over much of the winter months.
For instance, the U.S. Natural Gas Fund (NYSEArca: UNG) was up again Friday, gaining 1.3% in trading. The fund has been trading over its 50- and 200-day simple moving averages.
Currently, natural gas futures are moving on colder-than-expected weather forecasts and an expected draw down in gas stockpiles, according to Boost ETPs, a European fund provider known for its leveraged and inverse products. Natural gas is trading around $3.87 per million British thermal units. [Natural Gas ETFs Rally on Inventories, Weather]
“A squeeze on shorts may be seen over the coming weeks,” Boost ETPs said.
Currently, CFTC data reveals that net short positions are not as the peak. There are currently -132,980 lot short positions, or almost in “middle of the range,” compared to prior years.
The company anticipates a bull flag breakout to gains of $3.93 per million Btu next, pointing to a “golden cross” formation in the 20-, 60- and 250-day moving averages . The provider also warns of supports at $3.59 per million Btu ahead of $3.46 per million Btu.
“As information is disseminated through the market place, the trend suggests that prices have been rising and that they continue to rise for a while longer,” Boost ETPs added.
U.S. Natural Gas Fund
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Max Chen contributed to this article.