A rebound in exchange traded funds tracking natural gas has raised hopes the exchange traded funds are finally picking themselves off the mat after years of negative returns worsened by contango in futures markets.
Natural gas ETFs rallied Friday and held on to those gains despite reports of larger inventories. However, traders are betting on new natural gas contracts, anticipating a runup in prices on winter demand.
U.S. Natural Gas Fund (NYSEArca: UNG) rose fractionally on Monday.
Analysts anticipate greater demand for natural gas in generating electricity over the oncoming cold winter months, WSJ.com reported.
“With the shoulder month out of the way, people are starting to look at the winter,” Jay Levine, president of research firm Enerjay, said in the report.”Whether it continues or not remains to be seen.”
Ritterbusch & Associates believes that market fundamentals need to be in place to support higher natural gas prices.
“Without help from the weather, this market will continue to have significant difficulty piecing together a meaningful price rally,” Ritterbusch & Associates said in a note.