“The price implications for this are decidedly bearish,” according to Breanne Dougherty, analyst at Société Générale, as “significant volumes of natural gas will be dumped on to the market this October and November, especially if heating load is slow to ramp up.”
Moreover, a strengthening El Niño weather system could push temperatures above normal levels this winter, potentially pressuring heating demand and natural gas markets as well. [Warm El Niño Weather Could Cool Energy ETFs This Winter]
ETF traders can also hedge against falling natural prices with inverse ETFs. For instance, the VelocityShares Daily 3x Inverse Natural Gas ETN (NYSEArca: DGAZ) seeks to provide the daily inverse 3x, or -300%, performance of the NYMEX natural gas futures. The ProShares UltraShort Bloomberg Natural Gas (NYSEArca: KOLD) provides the daily inverse 2x, or -200%, performance. [High Stockpiles Sap Energy from Natural Gas ETF]
United States Natural Gas Fund
For more information on the natgas market, visit our natural gas category.
Max Chen contributed to this article.