As a result of the diminished supply outlook, natural gas related exchange traded funds could maintain their current levels, with the Energy Information Administration outlining higher-than-anticipated average natural gas prices for 2014.
The United States Natural Gas Fund (NYSEArca: UNG) and iPath Dow Jones-UBS Natural Gas Total Return Sub-Index ETN (NYSEArca: GAZ) are among the best performing exchange traded products of 2014, surging 25.8% and 25.0% year-to-date, respectively. UNG’s February high was its strongest level since late 2011.
The EIA estimates that natural gas will average $4.74 per million British thermal units, or 6.8% higher than its last month’s forecast, due to ongoing tight supply, reports Timothy Puko for the Wall Street Journal.
NYMEX natural gas futures were trading around $4.8 Tuesday.
Gas observers believe average prices from April through June will remain 10% above projections from a month ago.
The government forecaster also expects natural gas prices to finish 2014 at an average $4.88, or up 27% from the average price of $3.84 over 2013. However, the EIA warned that gas prices could dip to $4.23 in 2015 as inventories are replenished.