Additionally, the natural gas market has been stuck in a supply glut for years after the U.S. shale oil boom inundated the market. As of October 16, natural gas inventories were 4.5% above the five-year average, and some observers warn that inventories could continue to rise and test storage capacity. [Rising Inventory Levels Will Keep Natural Gas ETFs Pressured]
Bank of America Merill Lynch downwardly revised natural gas price projections to average $2.7 in the fourth quarter from its previous forecast of $3.2.
ETF traders can also hedge against continued natural gas weakness 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.
On Monday, DGAZ surged 16.0% and KOLD jumped 9.0%. Over the past three months, DGAZ gained 82.5% and KOLD rose 53.5%.
United States Natural Gas Fund
For more information on the natgas market, visit our natural gas category.
Max Chen contributed to this article.