Natural Gas ETFs Heat Up on Warmer Weather

As we get ready for the summer season, natural gas and commodity-related exchange traded funds jumped Tuesday on warming weather forecasts and rising price momentum.

On Tuesday, the United States Natural Gas Fund (NYSEArca: UNG) surged 6.2% and iPath Bloomberg Natural Gas Subindex Total Return ETN (NYSEArca: GAZ) increased 5.0%.

Related: Natural Gas ETFs for a Sizzling Summer Outlook

Meanwhile, natural gas futures rose 6.0% to $2.298 per million British thermal units. However, natural gas is still down about 15% so far this year due to weak winter heating demand, near-record production and record-high inventories.

Natural gas prices advanced to a four-month high after futures topped a technical level and forecasts warmed, reports Timothy Puko for the Wall Street Journal.

The natgas market has been closely tracking weather projections in recent weeks as traders tried to price a shifting outlook on early summer electricity demand for air conditioning. Gas typically dips to a seasonal low during the spring’s mild temperatures before hot summer weather raises demand for gas-fired electricity generation.

Analysts now point out that weather updates for mid-June are showing warmer-than-expected temperatures in the southeast, which has strengthened demand expectations in the biggest region for gas-fired power.