The Energy Information Administration reports total gas inventories for the week ended July 13 was at 3.163 trillion cubic feet, or 77% full and a level not typically seen until mid-September. Additionally, there is still 500 billion cubic feet more gas in the inventory year-over-year.

Natural gas ETFs that hold a basket of futures contracts with varying expiry dates have not captured the front month backwardation. For instance, the United States 12 Month Natural Gas Fund (NYSEArca: UNL) rose 3.6% and Teucrium Natural Gas ETF (NYSEArca: NAGS) was 4.6% higher over the past week.

UNG, on the other hand, rolls the near-month contract on a monthly basis, which helped it capitalize on the backwardated market. It should be noted that potential investors should keep an eye out for contango moving back into the futures market.

“When the prices of those back-month contracts exceed the price of the front-month contract (known as a state of “contango”), the fund loses money each time it rolls its position,” according to Morningstar analyst Abraham Bailin. “In contangoed markets, a fund like UNG can suffer heavy losses even as natural gas prices rise.”

United States Natural Gas Fund

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

Max Chen contributed to this article.