A natural gas exchange traded fund rallied Thursday on a surprise drop in inventories but has lost about a third of its value this year on falling prices and contango in futures markets. Prices have firmed a bit recently as hedge funds reportedly cut their bearish bets on the commodity.

U.S. Natural Gas Fund (NYSEArca: UNG) gained about 2% on Thursday. The ETF is down 33% year to date.

Other exchange traded products that follow natural gas prices were also higher Thursday, including iPath Dow Jones-UBS Natural Gas ETN (NYSEArca: GAZ), Teucrium Natural Gas (NYSEArca: NAGS) and U.S. 12 Month Natural Gas Fund (NYSEArca: UNL).

According to the Associated Press, the Energy Department’s Energy Information Administration said natural gas in storage dropped by 1 billion cubic feet for the week ended Nov. 25, compared to analysts expectations of an increase of 9 billion to 13 billion cubic feet. [ETF Chart of the Day: Natural Gas]

Nevertheless, inventory levels are still 7.3% above the five year average and 1.1% above last year’s level.

“The net withdrawal was supportive relative to market expectations and suggests at least some minor tightening of the background supply/demand balance,” Tim Evans, analyst at Citi Futures Perspective, said in a Reuters report.

Hedge funds recently scaled back short positions on natural gas from record levels, Bloomberg reported. Prices have rebounded on expectations that cold weather will drive demand and reduce stockpiles, according to the article.

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