Natural gas-related exchange traded funds hit all-time lows and were among the worst performing assets Monday as natgas futures plunged to a 13-year low on diminished heating demand in a mild winter.
Meanwhile, inverse natural gas ETFs that capitalize off the demise of the commodity surged. 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 increased 12.4% and KOLD jumped 8.3%. [Are Inverse & Leveraged Natural Gas ETFs About To Skyrocket?]
Nymex natural gas futures declined 5.5% to $1.88 per million British thermal units Monday. Futures dipped earlier to $1.862, the lowest since January 2002, reports Christine Buurma for Bloomberg. [Natural Gas ETFs Suffer Worst Winter Bets in 17 Years]
Record warm temperatures sapped the strength from natural gas prices. The latest weather forecasts anticipated temperatures more than 20 degrees Fahrenheit above average across parts of the eastern U.S. later this month. Some east coast cities even witnessed temperatures break records dating back tot he 19th century over the weekend.
Consequently, natural gas prices have declined as the mild winter has diminished heating demand and contributed to the largest stockpile surplus of natgas for this time of year since 2012. Meanwhile, the U.S. shale oil boom has continued to draw out more natural gas – output is expected to hit a fifth straight annual record this year, rising 6.3% to 79.6 billion cubic feet a day.