ETF Trends
ETF Trends

An exchange traded fund designed to follow natural gas futures climbed 15% on Thursday after a report that supply rose less than expected in the latest week.

The Energy Department’s Energy Information Administration said natural gas in storage grew by 67 billion cubic feet to 2.944 trillion cubic feet for the week ended June 8, the Associated Press reported.

Analysts expected a rise of 71 billion to 75 billion cubic feet.

U.S. Natural Gas Fund (NYSEArca: UNG) closed with a 15% gain Thursday.

The ETF has been volatile in 2012 along with natural gas prices. UNG was down 41% year to date heading into Thursday’s rally. [Natural Gas ETFs Bounce Nearly 30%]

The natural gas fund suffered a miserable first quarter before a month-long bounce that peaked in mid-May. [Is the Natural Gas ETF Rally Fizzling Out?]

In natural gas futures, Thursday’s price spike erased nearly half of the decline in natural gas prices over the past six weeks, CNBC.com reported.

“Traders say a government report of smaller-than-expected increase in storage levels has led to renewed focus on power demand, causing market participants to cover short positions as well as enticing some buyers,” according to the article.

“This was an extremely big surprise,” said NYMEX floor trader John Woods. “Now you re-evaluate the trade.”

“The market was wrong-footed ahead of the EIA number and the new shorts that piled in have turned and covered,” added Eugene McGillan, a broker and trader with Tradition Energy, in the CNBC report. “Now we’re triggering fresh technical buying.”

U.S. Natural Gas Fund


The opinions and forecasts expressed herein are solely those of John Spence, 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.