Despite plentiful supplies, natural gas futures are on the rise and it’s giving a hefty lift to natural gas exchange traded funds. Will it be enough to erase yesterday’s losses? Yesterday, natural gas prices tumbled almost 8% after the government reported that consumption had fallen to such a low point that the United States now has more natural gas supplies than at any other time on record, reports Chris Kahn for the Associated Press.

Today, traders are considering those ample supplies alongside the prospects for a long, cold winter and are banking on an increase in heating demand, reports Jason Womack for The Wall Street Journal.

Although the United States has eased up on the drilling, natural gas storage levels are continuing to grow. But analysts feel that the storage levels could quickly come down if the economy stages a recovery and fuel demand increases.

One concern is that the natural gas rig count has declined by more than half in the last year, leading to concern that producers might not be able to step up their production if demand does rise.

When buying natural gas, watch the trend lines and have a stop loss in place.

  • United States Natural Gas (NYSEArca: UNG): down 52.4% year-to-date; holds natural gas futures

  • First Trust ISE-Revere Natural Gas (NYSEArca: FCG): up 35.4% year-to-date; holds stocks of natural gas companies

For full disclosure, Tom Lydon’s clients own shares of UNG.

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

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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