An early rally in a natural gas ETF faded Wednesday on heavy volume after the commodity touched a five-month high on warm-weather forecasts.
U.S. Natural Gas Fund (NYSEArca: UNG) fell into negative territory Wednesday afternoon on trading volume that was more than twice the daily average.
The ETF hit resistance at the May high of about $20 a share.
“Natural gas futures jumped to a five-month high in New York on forecasts for hotter-than-normal weather that would boost fuel demand from power plants,” Bloomberg News reported earlier Wednesday.
“The main market driver is this heat and increased cooling needs in the coming weeks,” said Gene McGillia at Tradition Energy, in the report. “Prices have some momentum but we’ll need to see six weeks of these kinds of temperatures to push gas above $3.”
UNG, the natural gas fund, is still down about 26% year to date despite the quick bounce in April and May. The ETF invests in natural gas futures contracts that are continually “rolled,” so it won’t track the spot price. [ETFs for a Natural Gas Rebound]
U.S. Natural Gas Fund
