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.
[related_stories]Additionally, natural gas may be gaining traction from technical traders after prices inched above their 200-day moving average Tuesday for the first time since November 2014, which triggered buy orders. The long-term trend line is a widely observed indicator for technical traders to close out bearish positions or add on bullish allocations.
“If it stays above there it’s significant. Then you can make a case the market is bullish,” Scott Gettleman, an independent trader, told the WSJ.
Related: Natural Gas ETFs Ready for Summer Demand
UNG and GAZ are still trading below their 200-day simple moving averages. UNG, though, popped above its short-term, 50-day simple moving average.Natural Gas ETFs Heat Up on Warmer Weather
Nevertheless, natural gas stockpiles are still hovering near record-high levels, with U.S. natural gas storage at around 2.8 trillion cubic feet as of last week, or 37% higher than levels at this time year-over-year and above the five-year average for this time of the year, Investing reports.
For more information on the natgas market, visit our natural gas category.
United States Natural Gas Fund