Spring is quickly upon us, and natural gas exchange traded fund traders are already anticipating warmer weather and lower heating demand ahead.
Nymex natural gas futures decreased 6.3% Monday to $2.15 per million British thermal units.
Meanwhile, inverse natural gas ETFs that capitalize off weakness in 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 jumped 20.4% and KOLD advanced 13.6%.
Natural gas prices took their biggest hit in a month on forecasts for mostly average or above-normal temperatures in central U.S. from February 11 through February 15, reports Christine Buurma for Bloomberg.
According to Thomson Reuters analytics, February is expected to be about 9% warmer than normal and March is expected to be 19% warmer than normal.
“Whatever hopes there were for cold weather to kick off February have dissipated,” John Kilduff, a partner at Again Capital LLC, told Bloomberg. “It’s a real worry at this point that we’re not going to get any more significant heating demand.”