With rigs in the Gulf of Mexico operating againg after a hurricane disrupted operations, the natural gas exchange traded fund is strengthening in anticipation to winter weather.
The United States Natural Gas Fund (NYSEArca: UNG) surged over 4% Monday. UNG, though, is still down 4.4% year-to-date.
NYMEX natural gas futures were 3.9% higher Monday, trading around $3.64 million metric British thermal units.
“I think it’s reflecting that as we get closer to heating season, there aren’t many willing sellers out there, so the market has to push higher,” Gene McGillian, analyst and broker at Tradition Energy, said in a Wall Street Journal article.
Meteorologists forecast above-normal temperature trends in the two-week outlooks, which should support demand.
“Temperatures have been above normal, which is supportive for gas demand,” Phil Flynn, a senior market analyst at Price Futures Group, said in a Bloomberg article. “Traders are still pricing in some of the production lost because of the storm.”
Tropical Storm Karen, which hit over the weekend, dissipated but will continue to pressure prices upward on a temporary basis.
According to the U.S. Bureau of Safety and Environmental Enforcement, about 48% of U.S. natural gas production in the Gulf was shut down as of Oct. 6, Investing reports. [A Hurricane and Wintry Weather Help Support Natural Gas ETF]
United States Natural Gas Fund
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Max Chen contributed to this article.