Natural gas exchange traded funds (ETFs) certainly haven’t been shouting as loud as those for other commodities (hello, oil), but they’ve been delivering the returns.
The commodity has been a standout in what has been a rough and volatile market so far this year.
The one-year anniversary of the First Trust ISE-Revere Natural Gas (FCG) has just passed and year-to-date, it’s up 29.5%. Since its inception on May 11, it’s returned 45%.
CentreDaily reports that for companies to be a part of this fund, they need to derive a majority of their revenues from natural gas reserves or exploration in North America, among other things.
United States Natural Gas (UNG) has also been putting up some numbers, up 49.4% year-to-date. The fund invests in natural gas futures contracts.
Natural gas already doesn’t come cheap, but next winter a price spike similar to that of oil could be seen. So far this year, prices have shot up 57.3%, and other countries are willing to pay more than we are. Liquid natural gas shipments to the United States have slowed to a trickle and terminals are standing empty, reports Clifford Krauss for the New York Times.
That’s because of an assumption of American energy policy: that natural gas would be plentiful abroad and readily available for importation as production here tapers off and fields are tapped out. But demand in places other than the United States is picking up, and suddenly tankers that were bound for here are instead going to places such as Spain and Japan.
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.